2024 (8) TMI 897 - HC - GST

Cancellation of registration, modified to be operative prospectively from the date of the Show Cause Notice dated 22.12.2022 - impugned cancellation order does not reflect any reason for cancellation of the petitioner s GST registration - violation of principles of natural justice - HELD THAT - The SCN as well as the impugned cancellation order are liable to be set aside. The SCN does not provide any clue to the reasons for proposing to cancel the petitioner s GST registration. It refers to a complaint, which was not forwarded to the petitioner, and therefore, the petitioner had no opportunity to address any allegations that may have been made in the complaint. The impugned cancellation order is also liable to be set aside for the same reason. It is the petitioner s stand that he has closed his business and has since been filing Nil returns. It is also apparent that the petitioner also seeks that his GST registration be cancelled - this Court considers it apposite to direct that the petitioner s GST registration be cancelled prospectively from the date of the impugned cancellation order and not retrospectively with effect from 29.11.2018. Petition disposed off.

Summary

Issues:
Petitioner's GST registration cancellation with retrospective effect, Request for prospective cancellation, Lack of reasons in cancellation order and show cause notice, Complaint from Assistant Commissioner as sole reason, Petitioner's business closure due to COVID-19, Proper Officer's notice citing previous liabilities, Setting aside of show cause notice and cancellation order, Direction for prospective cancellation, Liability under GST Acts post-cancellation.

Analysis:
The petitioner challenged the retrospective cancellation of their GST registration through a petition, seeking alternative prospective cancellation from the date of the Show Cause Notice (SCN). The petitioner's business closure due to COVID-19 was cited as the reason for seeking cancellation. The Proper Officer's notice mentioned previous liabilities as the reason for rejection, lacking specific details for cancellation. Subsequently, the SCN proposing cancellation solely referred to a complaint from the Assistant Commissioner without providing any specific allegations for the petitioner to address.

The High Court noted the lack of clarity in the reasons for cancellation in both the SCN and the impugned cancellation order. It emphasized that cancellation of GST registration does not exempt a taxpayer from fulfilling their dues and liabilities. The Court found the absence of details in the complaint forwarded by the Assistant Commissioner, depriving the petitioner of the opportunity to respond to any allegations. Consequently, the Court set aside both the SCN and the cancellation order due to insufficient reasoning provided for the cancellation.

Considering the petitioner's closure of business and filing of 'Nil' returns, the Court directed the prospective cancellation of the GST registration from the date of the impugned cancellation order, rejecting the retrospective effect from 29.11.2018. The Court clarified that this prospective cancellation does not relieve the petitioner from liabilities under relevant GST Acts or immunity from statutory violations. The order does not prevent the respondent authority from taking lawful actions against the petitioner if necessary.

In conclusion, the High Court disposed of the petition with the direction for prospective cancellation of the GST registration and maintained the petitioner's liability under the GST Acts post-cancellation. The Court also disposed of any pending applications related to the case.