Finding that proper officer passed the order cancelling taxpayer’s GST registration with retrospective effect, the Delhi High Court clarified that such order does not indicate any reason for cancelling the GST registration much less from retrospective effect.
The High Court found that the only allegation against the assessee was that it was non-existent, which was sufficiently addressed by the assessee in his reply by claiming that he had to go to Rajasthan due to ill health of his father.
Further, at the relevant time when visit was scheduled by the Department, the taxpayer was travelling to Rajasthan and owing to this, his business place was closed and it was presumed that the taxpayer is non-existent, added the Court.
Thus, the High Court ruled that temporary suspension of business activity on account of ill health would not warrant cancellation of taxpayer’s GST registration.
The Division Bench of Justice Yashwant Varma and Justice Ravinder Dudeja observed that retrospective cancellation of GST registration has a cascading effect in as much as the concerned authorities would also deny the input tax credit to other tax payers who might have received supplies from the taxpayer.
Facts of the case
An enquiry was conducted in relation to non-genuine taxpayers, as a part of special drive for verification of GSTINs, and the officers of Anti Evasion, CGST visited the premises of assessee/ petitioner. During such visit at the registered address, assessee was found non-existent. Hence, a Show Cause Notice in Form GST REG-17 was issued, resulting in retrospective cancellation of registration.
Observations of the High Court
The Bench observed that in terms of Section 29(2) of CGST Act, the proper officer may cancel the GST registration of a person from such date, including any retrospective date, as he deems fit, if the circumstances set out in the said section are satisfied.
However, the registration cannot be cancelled with retrospective effect, and can be cancelled upon objective satisfaction of the proper officer, added the Bench.
Even though the SCN requires the assessee to appear before the undersigned i.e authority issuing the notice, the Bench found that said notice does not give the name of the officer or the place where the assessee was to appear.
Thus, the very foundation of the proceedings i.e. SCN is defective, as no effective opportunity for hearing was granted to the assessee before passing the final order on the show cause notice, added the Bench.
Observing that the circular/instructions issued by the Department are binding on the departmental authorities, the Bench explained that Dept. cannot take a contrary stand and cannot repudiate a circular even on the ground that it was inconsistent with the statutory provisions and thus, the effective right of being heard having been denied to the assessee, the order is violative of principles of natural justice.
Since the order is completely silent with regard to even any enquiry having been conducted, the High Court directed the Revenue to restore assessee’s GST registration, and disposed of the petition.
Counsel for Petitioner/ Assessee: Sumit K. Batra, Manish Khurana, Priyanka Jindal and Siddhanth Sarwal
Counsel for Respondent/ Revenue: Akshay Amritanshu, Samyak Jain, Drishti Saraf and Pragya Upadhyay
Case Title: Ram Niwas versus Commissioner of Central Goods and Services Tax & Anr
Case Number: W.P.(C) 13450/2024
