2024 (5) TMI 111 - HC - GST

Seeking cancellation of the GST registration on the ground of closure of business - Rejection of application for cancellation - order does not give any particulars or details - principles of natural justice - HELD THAT - There is no cogent reason on behalf of the Respondents as to why the applications seeking cancellation of the GST registration are being denied. If a trader seeks to shut the business and surrender its GST registration, there is no ground under which the department can refuse such an application except in cases where the interest of the revenue is at stake. In the instant case, no such ground has been taken by the department. Furthermore, mere cancelation of the registration does not preclude the department from taking any action in accordance with law for recovery of any tax, penalty or fine that may be due and even from retrospectively cancelling the registration is circumstances so warrant - It may be noticed, that on an application being filed for cancellation of the registration, the registration is automatically suspended and no business can thereafter be carried out under the said registration. In view of the fact that the Petitioner does not seek to carry on business or continue with the registration, the registration of Petitioner shall now be treated as cancelled with effect from 30.05.2023 i.e., the date when Petitioner first filed an application seeking cancellation of GST registration. Petition disposed off.

Summary

Issues involved:
The petitioner seeks a direction for the cancellation of GST registration, which was rejected twice by the respondent.

Judgment Details:

Issue 1: Rejection of GST registration cancellation application

The petitioner, engaged in trading of polymers and ethylene, applied for cancellation of GST registration on the ground of business closure. The application was rejected twice by the respondent without providing specific reasons for rejection. The petitioner's counsel argued that the rejection orders were blank and did not offer any details or particulars for the denial. The counsel emphasized that if a trader wishes to surrender their GST registration due to business closure, the department should not refuse such an application unless it affects revenue interests. The court noted that upon filing a cancellation application, the registration is automatically suspended, and no business can be conducted under that registration. The court ruled in favor of the petitioner, directing the cancellation of GST registration with effect from the date of the first application for cancellation, i.e., 30.05.2023.

Issue 2: Future actions by the Respondents

The judgment clarified that while the petitioner's GST registration is treated as canceled, the respondents are not barred from taking lawful steps for recovering any outstanding tax, penalty, or interest related to the business. The respondents are also allowed to retrospectively cancel the GST registration after issuing a show-cause notice and providing an opportunity for a hearing. The petition was disposed of accordingly.