2024 (6) TMI 117 - HC - GST

Dismissal of appeal on the ground of time limitation - retrospective cancellation of GST registration of petitioner on the ground of discontinuance of business/ closure of business - impugned order is bereft of any details - violation of principles of natural justice - HELD THAT - The Show Cause Notice and the impugned order are bereft of any details. Accordingly, the same cannot be sustained and neither the Show Cause Notice, nor the order spell out the reasons for retrospective cancellation. 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 clear that both the petitioner and the respondent want the GST registration to be cancelled, though for different reasons. The Petitioner does not seek to carry on business or continue the registration, the impugned order dated 18.08.2022 is modified to the limited extent that registration shall now be treated as cancelled with effect from 23.04.2021 i.e., the date when petitioner filed an application seeking cancellation of GST registration - 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: Petitioner challenges the dismissal of appeal on limitation grounds, retrospective cancellation of GST registration, and the validity of the Show Cause Notice.

Dismissal of appeal on limitation grounds: The Petitioner's appeal was dismissed solely on the ground of being time-barred. The GST registration of the Petitioner was cancelled retrospectively from 01.07.2017, and a Show Cause Notice was issued on 03.02.2022.

Retrospective cancellation of GST registration: The Petitioner, engaged in manufacturing and retailing, sought cancellation of GST Registration citing discontinuance of business. Two applications for cancellation were rejected without specific reasons. The subsequent Show Cause Notice did not provide cogent reasons for cancellation, and the order lacked details on the cancellation reasons.

Validity of Show Cause Notice: The Show Cause Notice issued to the Petitioner did not specify the officer or place for appearance, and it did not inform the Petitioner about the retrospective cancellation possibility. The subsequent order for cancellation did not provide reasons and contradicted itself on the submission of replies.

Judgment: The Court noted that cancellation of registration with retrospective effect must be based on objective criteria, not merely due to non-filing of returns. The order for retrospective cancellation lacked details and reasons, leading to modification of the cancellation date to 23.04.2021 when the cancellation application was filed. The Petitioner was directed to comply with Section 29 of the Central Goods and Services Tax Act, 2017. The Respondents were allowed to take steps for recovery of dues in accordance with the law, including retrospective cancellation after providing proper notice and a hearing to the Petitioner.