9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2025 (2) TMI 727 - HC - GSTValidity of the final order in terms of which its Goods and Services Tax (GST) registration came to be cancelled with retrospective effect - SCN embodied no intent or disclosure of the respondents contemplating cancellation from a retrospective date - violation of principles of natural justice - HELD THAT - When the impugned order is tested on the various precepts it becomes apparent that absence of reasons in the original SCN in support of a proposed retrospective cancellation as well as a failure to place the petitioner on prior notice of such an intent clearly invalidates the impugned action. The writ petition is entitled to succeed on this short ground alone. The cancellation of the petitioner s GST registration shall come into effect from the date of the SCN i.e. 28 March 2023 - petition allowed.
ISSUES PRESENTED and CONSIDERED
The primary legal issue considered in this judgment is the validity of the retrospective cancellation of the petitioner's Goods and Services Tax (GST) registration. Specifically, the court examined whether the cancellation order, which was applied retroactively, was justified under the provisions of the Central Goods and Services Tax Act, 2017, particularly Section 29. The core questions include:
ISSUE-WISE DETAILED ANALYSIS Relevant Legal Framework and Precedents Section 29 of the Central Goods and Services Tax Act, 2017, empowers authorities to cancel GST registration, including retrospectively, under certain circumstances. However, the exercise of this power must be reasoned and justified, particularly when applied retroactively. The court referenced previous judgments, including Riddhi Siddhi Enterprises vs. Commissioner of Goods and Services Tax and Ramesh Chander vs Assistant Commissioner of Goods and Services Tax, which emphasized the necessity of providing reasons for retrospective cancellations and ensuring due process. Court's Interpretation and Reasoning The court emphasized that the power to cancel GST registration retrospectively should not be exercised mechanically or without sufficient justification. The court noted that the absence of reasons in the Show Cause Notice (SCN) for the proposed retrospective cancellation and the failure to notify the petitioner of such intent were significant procedural lapses. The court highlighted that the mere existence of power under Section 29 does not justify its exercise without a demonstrable application of mind and reasoning. Key Evidence and Findings The court found that the SCN issued to the petitioner did not disclose any intent to cancel the GST registration retrospectively, nor did it provide reasons for such action. The cancellation order also lacked clarity and failed to specify the grounds for retrospective application. The court observed that similar deficiencies were present in other cases, such as Delhi Polymers vs Commissioner, Trade and Taxes, where the lack of reasons and procedural irregularities led to the invalidation of retrospective cancellations. Application of Law to Facts The court applied the legal principles established in previous judgments to the facts of the case. It concluded that the absence of reasons and prior notice of the intent to cancel the registration retrospectively rendered the cancellation order invalid. The court emphasized that the procedural safeguards under Section 29 were not followed, and the order lacked the necessary justification for retrospective effect. Treatment of Competing Arguments The court acknowledged the respondent's argument that retrospective cancellation could affect the taxpayer's customers by denying them input tax credit. However, the court did not find it necessary to delve into this aspect, as the procedural deficiencies were sufficient to invalidate the order. The court reiterated that retrospective cancellation should only be applied when warranted by circumstances and supported by objective criteria. Conclusions The court concluded that the writ petition should succeed due to the lack of reasons and prior notice for the retrospective cancellation. The court held that the cancellation should take effect from the date of the SCN, rather than retroactively. SIGNIFICANT HOLDINGS The court established several core principles regarding the cancellation of GST registration:
The court's final determination was to allow the writ petition, modifying the cancellation order to take effect from the date of the SCN (28 March 2023) and quashing the stipulation for cancellation from 24 September 2022.
|
