2023 (11) TMI 597 - HC - GST

Cancellation of deceased tax payer s registration with retrospective effect - failure to furnish the returns for a period of six months - HELD THAT - It is material to note that the impugned SCN did not propose to cancel the GST registration with retrospective effect. Although the Proper Officer is empowered to cancel the GST registration with retrospective date, the said power cannot be exercised arbitrarily and without any reason for cancelling the GST registration with retrospective effect. In the present case, the allegation against the deceased tax payer is of non-filing of returns. Obviously, a failure to furnish returns for a period of six months, absent any other reason, does not warrant cancellation of the GST registration with retrospective effect. Since the Proper Officer was informed of the demise of the tax payer and the stoppage of business, the question of filing the returns after the demise did not strictly arise. It is considered apposite to direct that the registration of the deceased tax payer be cancelled from the date of the application for cancellation of registration filed by the petitioner, that is from 30.04.2022 - petition disposed off.

Issues involved:
The issues involved in the judgment are cancellation of deceased taxpayer's registration with retrospective effect, legality of show cause notice issued in the name of deceased taxpayer, and the power of Proper Officer to cancel GST registration with retrospective effect.

Cancellation of Deceased Taxpayer's Registration with Retrospective Effect:
The petitioner, as the legal heir of the deceased taxpayer, challenged the cancellation of the deceased's GST registration with retrospective effect. The Proper Officer had issued a notice proposing dismissal of the cancellation application due to incorrect address details and stock valuation. Subsequently, an order rejecting the cancellation application was passed without providing any reasons. Another show cause notice was issued to cancel the registration due to non-filing of returns, leading to suspension of registration. However, the impugned show cause notice was also issued in the name of the deceased taxpayer, despite the Proper Officer being informed of the demise. The court held that cancellation with retrospective effect was not justified solely based on non-filing of returns, especially considering the death of the taxpayer and cessation of business. The court directed cancellation of registration from the date of the cancellation application, i.e., 30.04.2022.

Legality of Show Cause Notice Issued in the Name of Deceased Taxpayer:
The petitioner contended that the show cause notice proposing cancellation of registration was illegal as it was issued in the name of the deceased taxpayer even after the Proper Officer was informed of the demise. The court found that issuing notices in the deceased's name post his demise was impermissible. The court emphasized that such actions should be taken with due regard to the legal status of the taxpayer and the information available to the tax authorities.

Power of Proper Officer to Cancel GST Registration with Retrospective Effect:
Although the Proper Officer had the power to cancel GST registration with retrospective effect, the court highlighted that such power should not be exercised arbitrarily. In this case, the court noted that mere non-filing of returns for six months, without any additional reasons, did not warrant cancellation with retrospective effect. The court emphasized that the Proper Officer should consider the circumstances, such as the demise of the taxpayer and cessation of business, before deciding on retrospective cancellation. The court clarified that the cancellation of registration would not prevent the Department from taking action for any violations of the CGST Act and that specific reasons for retrospective cancellation would require a separate show cause notice to the legal heir of the deceased taxpayer.

← Previous Next →