Case: Delhi HC- Veetrag Traders vs. The Commissioner of SGST Delhi & Ors. [W.P.(C) 2416/2024]
Fact:
- Taxpayer is a trading firm & is engaged in the business of selling of craft paper and possessed GST registration.
- Taxpayer had submitted an application seeking cancellation of GST registration dated 01.10.2019 on the ground of closure of business. On account of unsatisfactory reply, order dated 16.06.2020 was passed rejecting the application for cancellation merely stating, “Application rejected in accordance with the provisions of the Act”.
- Thereafter, SCN dated 18.02.2021 was issued to the taxpayer. Though the notice does not specify any cogent reason, it merely states “Any Taxpayer other than composition taxpayer has not filed returns for a continuous period of six months”. Further, the said SCN also does not put the taxpayer to notice that the registration is liable to be cancelled retrospectively. Thus, the taxpayer had no opportunity to even object to the retrospective cancellation of the registration.
Held:
- The court observed that the Show Cause Notice and the impugned order are also bereft of any details. Accordingly, the same cannot be sustained and neither the Show Cause Notice, nor the order spell out the reasons for retrospective cancellation.
- Further it observed that 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 taxpayer’s registration is required to be cancelled with retrospective date also covering the period when the returns were filed, and the taxpayer was compliant.
- The court modified the order of suspension to a limited extent and gave effect of cancellation from 01.10.2019, the date when the taxpayer applied for the cancellation of GST registration.