2024 (5) TMI 1377 - HC - GST

Violation of principles of natural justice - SCN and impugned order are bereft of any details - Maintainability of appeal - appeal dismissed solely on the ground that the same is barred by limitation - retrospective cancellation of GST registration of the Petitioner - HELD THAT - It is noticed that 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. Such satisfaction cannot be subjective but must be based on some objective criteria - it is not deemed apposite to examine this aspect but assuming that the respondent s contention in 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. In view of the fact that the Petitioner does not wish to carry on business or continue with the registration, impugned order dated 04.10.2019 is modified to the limited extent that registration shall now be treated as cancelled with effect from 19.09.2019 i.e., the date when Show Cause Notice seeking cancellation of GST registration was issued. Petition disposed off.

Summary

Issues Involved: Impugning orders of dismissal on limitation grounds, retrospective cancellation of GST registration, lack of reasons provided in Show Cause Notice and order, compliance with Section 29 of the Central Goods and Services Tax Act, 2017.

In the present case, the Petitioner challenged an order dismissing their appeal based on limitation grounds and another order retrospectively canceling their GST registration. The Show Cause Notice lacked specific reasons and failed to mention the date for the Petitioner's appearance. The subsequent order for cancellation did not provide clear reasons and contradicted itself regarding the Petitioner's response. The order also lacked justification for the retrospective cancellation of registration, with no explanation provided for the effective date chosen.

The Court noted that both the Show Cause Notice and the order for cancellation were deficient in details and failed to specify reasons for the retrospective cancellation. The Court highlighted that registration cannot be cancelled with a retrospective effect mechanically, emphasizing that such decisions must be based on objective criteria rather than subjective judgment. The Court also pointed out that the consequences of retrospective cancellation, such as denying input tax credit to the taxpayer's customers, should be considered before making such a decision.

Considering that the Petitioner had ceased business activities and no longer wished to continue with the registration, the Court modified the impugned order to reflect the cancellation with effect from the date of the Show Cause Notice. The Petitioner was directed to comply with the requirements of Section 29 of the Central Goods and Services Tax Act, 2017. The Respondents were allowed to take steps for recovery of any due tax, penalty, or interest, including retrospective cancellation of GST registration following proper procedures and natural justice.

In conclusion, the petition was disposed of with the modification of the cancellation date and the clarification regarding further actions by the Respondents in accordance with the law.