DEEPALI KAPOOR vs AVATO WARD-63,STATE GOODS AND SERVICES TAX & ANR.
$~24
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of decision: 29.01.2024
+ W.P.(C) 132/2024 & CM APPL. 617/2024
DEEPALI KAPOOR…. Petitioner
versus
AVATO WARD-63, STATE GOODS AND
SERVICES TAX & ANR. …… Respondents
Advocates who appeared in this case:
For the Petitioner: Mr. Nitin Gulati and Ms. Reena Gandhi, Advocates.
For the Respondent: Mr. Rajeev Aggarwal, ASC with Ms. Samridhi Vats, Advocate.
CORAM:-
HONBLE MR. JUSTICE SANJEEV SACHDEVA
HON’BLE MR. JUSTICE RAVINDER DUDEJA
JUDGMENT
SANJEEV SACHDEVA, J. (ORAL)
1. Petitioner impugns order dated 26.07.2023, whereby the GST registration of the Petitioner was cancelled retrospectively with effect from 02.07.2017 andalso impugns Show Cause Notice dated 03.02.2023.
2. Vide Show Cause Notice dated 03.02.2023, petitioner was called upon to show cause why the registration be not cancelled for the following reasons:-
returns furnished by you under Section 39 of the Central Goods and Services Tax Act,2017
3. Though thenotice does not specify any cogent reason, there is an observation in the notice stating, failure to furnish returns for a continuous period of six months. The show cause notice requires the petitioner to appear before the undersigned i.e. authority issuing the notice.
4. Further the impugned order dated 26.07.2023 merely states that no reply to the show cause notice has been submitted and on day for personal hearing, you did not appear in person or through an authorized representative. It, further, states that the registration is liable to be cancelled for the following reason Section 29(2)(c)- person, other than paying tax U/s 10, failed to furnish returns for prescribed periods. The order further states that effective date of cancellation of registration is 02.07.2017 i.e., retrospective date.
5. The Show Cause Notice and the Impugned Order donot put the Petitioner to notice that the registration is liable to be cancelled retrospectively. Accordingly, petitioner had no opportunity to even object to the retrospective cancellation of the registration.
6. Learned Counsel for the Petitioner submits that the petitioner was unable to reply to the said show cause notice due to financial hardship and mental depression.
7. He submits that the Petitioner is no longer carrying on business and claims to have shut the business w.e.f03.02.2023 and applied for cancellation of GST registration.
8. He further submits that an additional affidavit has been filed by the Petitioner stating that petitioner is no longer interested in continuing the business and is not interested in restoration of the GST registration and her business may be treated as closed.
9. In terms of Section 29(2) of the Central Goods and Services Tax Act, 2017, the proper officer may cancel the GST registration of a person from such date including any retrospective date, as he may deem fit if the circumstances set out in the said sub-section are satisfied. Registration cannot be cancelled with retrospective effect mechanically. It can be cancelled only if the proper officer deems it fit to do so. Such satisfaction cannot be subjective but must be based on some objective criteria. Merely, because a taxpayer has not filed the returns for some period does not mean that the taxpayers registration is required to be cancelled with retrospective date also covering the period when the returns were filed and the taxpayer was compliant.
10. It is important to note that, according to the respondent, one of the consequences for cancelling a tax payers registration with retrospective effect is that the taxpayers customers are denied the input tax credit availed in respect of the supplies made by the tax payer during such period. Although, we do not consider it apposite to examine this aspect but assuming that the respondents contention in this regard is correct, it would follow that the proper officer is also required to consider this aspect while passing any order for cancellation of GST registration with retrospective effect. Thus, a taxpayers registration can be cancelled with retrospective effect only where such consequences are intended and are warranted.
11. In view of the above, facts and circumstances, the order of cancellation is modified to the extent that the same shall operate with effect from 03.02.2023 i.e., datewhen the GST registration was suspended by show cause notice dated 03.02.2023.Petitioner shall furnish all the requisite returns updated to the date of cancellation of registration.
12. It is clarified that respondents are also not precluded from taking any steps for recovery of any tax, penalty or interest that may be due from the petitioner in accordance with law.
13. Petition is accordingly disposed of in the above terms.
SANJEEV SACHDEVA, J
RAVINDER DUDEJA, J
JANUARY 29, 2024
rs
W.P.(C) 132/2024 Page 2 of 4