2023 (9) TMI 399 - HC - GST

Cancellation of GST registration of petitioner on the ground of closure of business - non-filing of returns for a period of six months - HELD THAT - There was no indication that the petitioner s GST Registration would be cancelled with retrospective effect - the impugned order dated 15.03.2021 provides no reasons for cancellation of petitioner s GST registration with retrospective effect. The only allegation against the petitioner was not filing returns for a period of six months is no plausible reason to cancel its GST registration with retrospective effect, that is, from 01.07.2017. It is the petitioner s case that it had discontinued its business w.e.f. 31.12.2019, we consider it apposite to direct that the petitioner s cancellation of GST registration shall take effect from 31.12.2019 - impugned order set aside - petition allowed.

Summary

Issues involved:
The issues involved in this case are the cancellation of GST registration of the petitioner with retrospective effect, the validity of the notice seeking clarifications under Rule 9(2) of the Central Goods and Services Tax Rules, 2017, and the rejection of the petitioner's application for cancellation of GST registration.

Cancellation of GST Registration with Retrospective Effect:
The petitioner filed a petition seeking the cancellation of its GST registration with effect from 31.12.2019 as it had closed its business. The Proper Officer initially rejected the petitioner's response to the notice seeking clarifications and later issued a Show Cause Notice for not filing returns for six months, leading to the cancellation of registration from 15.03.2021 with retrospective effect from 01.07.2017. The High Court held that the mere non-filing of returns for six months is not a plausible reason to cancel the registration retrospectively. The court set aside the impugned order and directed the cancellation of GST registration from 31.12.2019, the date of business closure.

Validity of Notice under Rule 9(2) of CGST Rules:
The respondent No. 2 had issued a notice under Rule 9(2) of the Central Goods and Services Tax Rules, 2017, seeking clarifications from the petitioner. The petitioner responded to the notice within the stipulated time. However, the petitioner contended that the notice was impermissible as it was issued beyond six months from the date of the application for cancellation of GST registration. The court did not delve further into the validity of this notice as the main issue revolved around the retrospective cancellation of registration.

Rejection of Application for Cancellation of GST Registration:
The Proper Officer rejected the petitioner's application for cancellation of GST registration, leading to subsequent actions culminating in the cancellation order with retrospective effect. The court found that the order did not provide any valid reasons for the retrospective cancellation and held that the cancellation from 01.07.2017 was unjustified. The court set aside the impugned order and directed the cancellation of registration from the date of business closure, i.e., 31.12.2019. The court clarified that this decision does not prevent the department from taking further action if any tax, interest, or penalty is found due from the petitioner.