2024 (5) TMI 1307 - HC - GST

Retrospective cancellation of GST registration of the petitioner - SCN does not give any reasons for cancellation - Violation of principles of natural justice - HELD THAT - The SCN and the impugned order are bereft of any details. Neither the Show Cause Notice, nor the order spell out the reasons for retrospective cancellation. They also do not give any particulars of the alleged wrongful availment of ITC from SAI Enterprises and Mahadev Enterprises. 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. Such satisfaction cannot be subjective but must be based on some objective criteria. 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 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. It is clear that both the petitioner and the respondent want the GST registration to be cancelled, though for different reasons. Petition disposed off.

Summary

Issues Involved:
The judgment involves the retrospective cancellation of GST registration, lack of reasons provided for cancellation, and the revocation application rejection based on alleged wrongful availment of Input Tax Credit (ITC).

Retrospective Cancellation of GST Registration:
The petitioner challenged the retrospective cancellation of their GST registration, which was effective from 01.07.2017, without being given an opportunity to object to this retrospective action. The impugned order lacked reasons for cancellation and did not provide any justification for the retrospective date.

Revocation Application Rejection:
After the petitioner filed an application seeking revocation of the cancellation, it was rejected based on the alleged wrongful availment of ITC from specific enterprises, namely SAI Enterprises and Mahadev Enterprises. The rejection lacked specific details regarding this alleged wrongful availment.

Legal Analysis and Decision:
The court observed that the cancellation of registration cannot be done mechanically with retrospective effect. It must be based on objective criteria and not merely due to non-filing of returns for a specific period. The judgment emphasized that cancellation with retrospective effect should only occur if intended consequences are warranted.

Conclusion:
Considering the lack of details in the Show Cause Notice and the impugned order, the court modified the cancellation date to 27.04.2023, the date of the Show Cause Notice issuance. 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 permitted to take appropriate steps for recovery if any wrongful availment of ITC is found, including retrospective cancellation after due process.

Disposition:
The petition was disposed of with the modification of the cancellation date and directions for compliance and potential recovery actions by the Respondents in case of wrongful availment of ITC.