KWATRA AUTO INDUSTRIES THROUGH ITS PROPRIETOR YOGESH KUMAR MAL vs COMMISSIONER OF DELHI GOODS AND SERVICES TAX ACT & ANR.
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of decision: 02.02.2024
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+ W.P.(C) 1557/2024
KWATRA AUTO INDUSTRIES THROUGH ITS PROPRIETOR YOGESH KUMAR MAL ….. Petitioner
versus
COMMISSIONER OF DELHI GOODS AND SERVICES TAX ACT & ANR ….. Respondents
Advocates who appeared in this case:
For the Petitioner: Mr. M. A. Ansari, Mr. Khursheed Ahmad, Mr. Arvind KumarSoni, Mohd Kamil & Mr. Ahmad Ansari, Advocates.
For the Respondent: Ms. Shaguftha, Advocate.
CORAM:-
HONBLE MR. JUSTICE SANJEEV SACHDEVA
HON’BLE MR. JUSTICE RAVINDER DUDEJA
JUDGMENT
SANJEEV SACHDEVA, J. (ORAL)
1. Petitioner impugns Order in Appeal dated 03.01.2024 whereby the appeal filed by the Petitioner has been dismissed solely on the ground of limitation.
2. Petitioner filed the appeal impugning order of cancellation registration dated 25.11.2019 whereby the GST registration of the Petitioner was cancelled retrospectively with effect from 01.07.2017. Petitioner also impugns show cause notice dated 14.11.2019.
3. Vide show cause notice dated 14.11.2019, Petitioner was called upon to show cause as to why the registration be not cancelled for the following reasons :-
Taxpayer found Non-Functioning/Not Existing at the Principal Place of Business.
4. Petitioner, a proprietorship concern with trade name M/s Kwatra Auto Industries having the principal place of business at 28/126,Gali No.13 NALA Side Vishwas Nagar Shahdra Delhi-110032 was engaged in business of trading in parts and accessories of Motor Vehicles.
5. The show cause notice issued to the Petitioner on 14.11.2019 merely states taxpayer found non-functioning/non-existing at principal place of business. Further, the impugned order dated 25.11.2019 merely stated that No reply to the show cause notice has been submitted and the effective date of cancellation of registration is 01.07.2017 i.e. with retrospective effect.
6. The Show Cause Notice and the Impugned Order do not 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.
7. It was brought to the notice of the Court that Petitioner migrated from DVAT to CGST Act after the commencement of GST Act, whereby the petitioner had uploaded the rent agreement at GST Portal for the Principal Place of business 25/20 Gali No.16 Vishwas Nagar, Shahdara -110032. But inadvertently the account for the petitioner entered the old address of the principal office. Petitioner was conducting business at his principal place of business 25/20 Gali No.16 Vishwas Nagar, Shahdara -110032 vide registered rent agreement.
8. Learned Counsel for the petitioner submits that the petitioner had filed the last GSTR-3B return output tax liability for September 2019 and has shut the business w.e.f 01.10.2019.
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 01.10.2019, i.e. the date business was shut down.
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
FEBRUARY 02, 2024/sk
W.P.(C) 1557/2024 Page 1 of 4