2024 (5) TMI 1040 - HC - GST

Appeal dismissed solely on the ground that the same is barred by limitation - Cancellation of GST registration of the Petitioner with retrospective effect - no reasons for cancellation given - violation of principles of natural justice - HELD THAT - The impugned order dated 27.06.2019 passed on the Show Cause Notice dated 02.03.2019 does not give any reasons for cancellation. It merely states that the registration is liable to be cancelled for the following reason Whereas no reply to notice to show cause has been submitted . However, the said order in itself is contradictory - There is no material on record to show as to why the registration is sought to be cancelled retrospectively. The Show Cause Notice and the impugned order are bereft of any details. Neither the Show Cause Notice, nor the order spell out the reasons for retrospective cancellation. Accordingly, the same cannot be sustained. In terms of Section 29(2) of the Act, the proper officer may cancel the GST registration of a person from such date including any retrospective date, as he may deem fit if the circumstances set out in the said sub-section are satisfied. Registration cannot be cancelled with retrospective effect mechanically. It can be cancelled only if the proper officer deems it fit to do so - 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. In view of the fact that the Petitioner does not wish to carry on business or continue with the registration, impugned order dated 27.06.2019 is modified to the limited extent that registration shall now be treated as cancelled with effect from 27.06.2019 i.e., the date when the order cancelling the GST registration of the Petitioner was issued. Petitioner shall make the necessary compliances as required by Section 29 of the Central Goods and Services Tax Act, 2017. Petition disposed off.

Summary

Issues Involved:
The judgment involves the dismissal of an appeal on the ground of limitation, retrospective cancellation of GST registration, and the lack of reasons provided for the cancellation.

Dismissal of Appeal on Limitation Ground:
The petitioner challenged the order dismissing their appeal solely on the basis of being time-barred. The impugned order dated 03.01.2024 was contested along with the retrospective cancellation of GST registration and a Show Cause Notice dated 02.03.2019.

Retrospective Cancellation of GST Registration:
The petitioner, a proprietor of a trading business, faced retrospective cancellation of GST registration from 01.07.2017. The cancellation was based on the absence of a reply to the Show Cause Notice, without clear reasons provided for the retrospective action.

Lack of Reasons for Cancellation:
The Show Cause Notice and subsequent order lacked specific reasons for the retrospective cancellation of GST registration. The absence of details and justification rendered the cancellation unsustainable under Section 29(2) of the Act, emphasizing the need for objective criteria.

Judgment Details:
The petitioner's business closure due to financial constraints and personal reasons was highlighted, leading to the inability to continue operations since 2019. The court noted the absence of reasons in the cancellation order and the importance of justifying retrospective cancellations based on objective criteria rather than mere non-filing of returns.

Modification of Cancellation Order:
Considering the petitioner's desire to cease business operations and registration, the impugned order was modified to reflect the cancellation effective from 27.06.2019, aligning with the issuance date of the cancellation order. The petitioner was directed to comply with Section 29 of the Central Goods and Services Tax Act, 2017.

Clarification on Further Actions:
The judgment clarified that the respondents could pursue recovery of any outstanding tax, penalty, or interest post-cancellation, following due process and natural justice. The petitioner's compliance with necessary requirements was emphasized, and the petition was disposed of accordingly.