M/S MAURYA INDUSTRIES vs THE UNION OF INDIA & ANR.
$~19
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Judgment delivered on: 11.03.2024
+ W.P.(C) 10155/2023
M/S MAURYA INDUSTRIES ….. Petitioner
versus
THE UNION OF INDIA & ANR ….. Respondents
Advocates who appeared in this case:
For the Petitioner: Mr. N.K. Sharma and Mr. Kapil Gautam, Advocates.
For the Respondents: Mr. Raghvendra Shukla, Senior Panel Counsel for UOI.
Mr. Anurag Ojha, Senior Standing Counsel with Mr. Subham Kumar and Mr. Vipul Kumar, Advocates for R-2
,,
CORAM:-
HONBLE MR. JUSTICE SANJEEV SACHDEVA
HON’BLE MR. JUSTICE RAVINDER DUDEJA
JUDGMENT
SANJEEV SACHDEVA, J. (ORAL)
1. Petitioner impugns Show Cause Notice dated 06.06.2023 and also impugns order dated 15.06.2023 whereby GST registration of the Petitioner was cancelled w.e.f 26.10.2022.
2. Petitioner had submitted an application on 12.04.2023, seeking cancellation of its registration on the ground that the business of the Petitioner was discontinued as firm was incurring losses.
3. A query was raised to the petitioner on 04.05.2023, requiring petitioner to furnish certain details which were duly replied on 06.05.2023 and the said details were furnished.
4. The application seeking cancellation was rejected by order dated 06.06.2023 on the ground that the Anti Evasion Branch by e-mail dated 31.05.2023 had informed that the taxpayer was found non-existent at the principal place of business.
5. Thereafter, a Show Cause Notice dated 06.06.2023 was issued on the ground that Section 29 (2) (e) registration obtained by means of fraud, willful misstatement, and suppression of facts. Pursuant thereto, impugned order of cancellation dated 15.06.2023 has been passed.
6. Along with the counter-affidavit, a Panchnama dated 30.05.2023 has been annexed which shows that an inspection of the subject premises was carried out on 30.05.2023 at 6.10 P.M., however, petitioner firm was not found existent at the subject premises.
7. As per the petitioner, petitioner had applied for cancellation of GST registration on 12.04.2023 on the ground that petitioner had discontinued its business.
8. Clearly, the order for cancellation on the ground that petitioner was found non-existent on 30.05.2023 ex-facie is not sustainable for the reason that on 12.04.2023, petitioner had himself applied for cancellation of registration on the ground of closure of business. It is but obvious that on 30.05.2023, when an inspection was carried out, petitioner was not found available at the subject premises.
9. Along with the counter-affidavit, the case of the respondent is that petitioner has wrongfully claimed certain Input Tax Credit without the underlying supplies and supporting documents.
10. We are unable to accept the said contention of learned counsel for respondents for the reason that till the filing of the counter-affidavit, neither the Show Cause Notice nor the order refer to any wrongful claim of Input Tax Credit. It is of course open to the authorities to take appropriate action in accordance with law by issuing proper Show Cause Notice, grant of an opportunity of hearing and then passing an appropriate order.
11. Further, we may note that neither the Show Cause Notice dated 06.06.2023, nor the impugned order give any reasons.
12. The Show Cause Notice dated 06.06.2023 does not bear the name and designation of the officer issuing the Show Cause Notice, though it required the petitioner to appear before the issuer of the notice. Further, the order of cancellation dated 15.06.2023 also does not give any reasons. It merely states reference to the Show Cause Notice issued dated 06.06.2023 and then states that the effective date of cancellation of registration is 26.10.2023 i.e., a retrospective date.
13. In terms of Section 29(2) of the Act, 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.
14. 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 required to consider this aspect while passing any order for cancellation of GST registration with retrospective effect. Thus, a taxpayer’s registration can be cancelled with retrospective effect only where such consequences are intended and are warranted.
15. In view of the above, the impugned order dated 15.06.2023 and the Show Cause Notice dated 06.06.2023 are modified to the extent that the registration of the petitioner shall now be deemed cancelled with effect from 12.04.2023 i.e., when the petitioner applied for cancellation of registration. Petitioner shall make the necessary compliances as required by Section 29 of the Central Goods and Services Tax Act, 2017.
16. 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 in respect of the subject firm in accordance with law including retrospective cancellation of the GST registration.
17. Petition is accordingly disposed of in the above terms. All rights and contentions of the parties are reserved.
SANJEEV SACHDEVA, J
MARCH 11, 2024/ss RAVINDER DUDEJA, J
W.P.(C) 10155/2023 Page 2 of 5