2024 (5) TMI 1304 - HC - GST

Retrospective cancellation of GST registration of the petitioner - no proper reasons given for cancellation - petitioner had no opportunity to even object to the retrospective cancellation of the registration - violation of principles of natural justice. No proper SCN - HELD THAT - The SCN and the impugned order are also 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. However, as the petitioner is no longer interested in continuing the business, the Show Cause Notice is not quashed. Retrospective Cancellation of GST Registration - HELD THAT - 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 - it is not considered apposite to examine this aspect but assuming that the respondent s contention is required to consider this aspect while passing any order for cancellation of GST registration with retrospective effect. Thus, a taxpayer's registration can be cancelled with retrospective effect only where such consequences are intended and are warranted. Petition disposed off.

Summary

Issues Involved:
The issues involved in this case are the retrospective cancellation of GST registration, lack of proper notice and reasons for cancellation, and the subsequent application for revocation of cancellation.

Retrospective Cancellation of GST Registration:
The petitioner challenged the retrospective cancellation of their GST registration, which was cancelled with effect from 23.01.2020. The petitioner contended that the Show Cause Notice did not provide a specific date and time for a personal hearing, depriving them of the opportunity to object to the retrospective cancellation. The impugned order for cancellation lacked reasons and was contradictory, stating no reply was submitted despite referencing a reply dated 09/02/2022. The court noted that registration cannot be cancelled with a retrospective effect mechanically and must be based on objective criteria.

Lack of Proper Notice and Reasons for Cancellation:
The Show Cause Notice and the subsequent order for cancellation were found to be deficient in providing details and reasons for the retrospective cancellation. The court highlighted that the lack of specific reasons for retrospective cancellation rendered the actions unsustainable. Despite this, as the petitioner expressed disinterest in continuing the business, the court did not quash the Show Cause Notice but modified the cancellation to be effective from the date of the notice, i.e., 31.01.2022.

Application for Revocation of Cancellation:
Following the rejection of the application for revocation of cancellation, the petitioner filed an affidavit clarifying the bank account details. The respondent's counsel argued that the cancellation was initiated due to incorrect bank account details provided during registration. The court emphasized that cancellation with retrospective effect should only occur if warranted by specific consequences and objective criteria.

Conclusion:
The court modified the impugned order to cancel the GST registration with effect from the date of the Show Cause Notice. The petitioner was directed to comply with the necessary requirements under Section 29 of the Central Goods and Services Tax Act, 2017. The respondents were allowed to take steps for recovery of any outstanding dues in accordance with the law, including retrospective cancellation after issuing a proper Show Cause Notice and granting a hearing to the petitioner. The petition was disposed of accordingly.