INDOTECH MAGNETICS vs COMMISSIONER OF DELHI GOODS AND SERVICE TAX & ANR.
$~3
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of decision: 03.01.2024.
+ W.P.(C) 16380/2023 & CM APPL. 65948/2023
INDOTECH MAGNETICS ….. Petitioner versus
COMMISSIONER OF DELHI GOODS AND SERVICE TAX & ANR. ….. Respondents
Advocates who appeared in this case:
For the Petitioner: Mr. Rajesh Mahna, Mr. Ramanand Roy & Mr. Mayank Kouts, Advocates.
For the Respondents: Mr. Rajeev Aggarwal with Ms. Samridhi Vats, Advocates
CORAM:-
HONBLE MR. JUSTICE SANJEEV SACHDEVA
HON’BLE MR. JUSTICE RAVINDER DUDEJA
JUDGMENT
SANJEEV SACHDEVA, J. (ORAL)
1. Issue notice.
2. Mr. Aggarwal, learned counsel appearing for the respondents accept notice.
3. Petitioner has filed the present petition impugning an order dated 11.10.2023 (hereafter the impugned order), whereby the petitioners GST registration was cancelled with retrospective effect.
4. Petitioner was registered with the GST authority with effect from 16.07.2023. The petitioner claims that he was carrying on the business under the name of M/s Indotec Magnetics and was assigned Goods and Service Tax Identification Number (GSTIN) 07AAAFI8460N1ZZ. Petitioner claims that they discontinued the business w.e.f. 01.04.2020 and filed an application dated 29.05.2020 praying that the GST registration be cancelled with effect from the said date. Respondent did not act on the said request for over one year. However, on 11.01.2022, the concerned officer of GST department issued a notice on the ground that no return had been filed for over six months
5. The proper officer issued a show cause notice dated 11.01.2022 (hereafter the SCN), proposing to cancel the petitioners GST registration for the following reasons: –
1 Any Taxpayer other than composition taxpayer has not filed returns for a continuous period of six months.
6. Petitioner was called upon to respond to the SCN within a period of seven working days and to appear before the concerned officer for personal hearing on the appointed date and time, failing which the petitioner was cautioned that their case would be decided ex-parte. Additionally, the petitioners GST registration was suspended with effect from the date of the SCN, i.e. 11.01.2022.
7. Thereafter, the proper officer passed the impugned order cancelling the petitioners GST registration with retrospective effect from 01.07.2017. The impugned order does not indicate any reason for cancelling the petitioners GST registration except mentioning that no reply has been received to the SCN.
8. 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. The 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.
9. 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.
10. In the present case, the petitioner had indicated that she closed the business w.e.f 01.04.2020. Thus, not filing returns, thereafter, cannot be a ground to cancel the registration in respect of the period while petitioner was carrying on the business in compliance with the provisions of the law.
11. As noted above, the SCN proposing to cancel the petitioners GST registration is flawed. The impugned order cancelling the petitioners GST registration is also liable to be set aside as it is bereft of any reason. It neither specifies the reason for cancelling the GST registration nor gives any clue as to why it was cancelled with retrospective effect.
12. In view of the above, we consider it apposite to allow the present petition and direct that the cancellation of the petitioners GST registration shall take effect from 29.05.2020, being the date of the application filed by the petitioner seeking cancellation of the GST registration.
13. It is clarified that this order would not preclude the respondent from initiating any steps in accordance with law, if it is found that the petitioner had violated any provisions of the Act prior to 29.05.2020.
14. The petition is allowed in the aforesaid terms. All pending applications are also disposed of.
SANJEEV SACHDEVA, J
January 03, 2024/sk RAVINDER DUDEJA, J
W.P.(C) 16380/2023 Page 1 of 4