2025 (2) TMI 999 - HC - GST

Rejection of application for voluntary cancellation of Goods Services Tax registration - HELD THAT - As long as the petitioner was able to satisfy that the supplies were in fact obtained from suppliers who were registered at the relevant time and had discharged their corresponding tax liability the mere fact that the registration of those suppliers came to be cancelled subsequently or with retrospective effect would not be a reason germane for the purposes of examining the request for voluntary cancellation. This would of course be subject to due verification by the respondents. The writ petitioner is directed to furnish a response in terms indicated above for the consideration of the competent authority of the respondents within a period of three weeks from today. The application seeking voluntary cancellation may be taken up for consideration thereafter. Petition disposed off.

Summary

The Delhi High Court considered a case where the petitioner sought voluntary cancellation of Goods & Services Tax (GST) registration, which was rejected by the authorities citing various reasons. The key issues presented and analyzed in the judgment are as follows:**Issues Presented and Considered:**1. Whether the petitioner's application for voluntary cancellation of GST registration was rightly rejected by the authorities.2. Whether the petitioner fulfilled the necessary conditions for claiming Input Tax Credit (ITC) and complied with relevant provisions of the CGST Act, 2017.3. Whether the petitioner's application for cancellation can be reconsidered based on the submissions made.**Issue-Wise Detailed Analysis:****Issue 1: Rejection of Voluntary Cancellation Application**- The authorities rejected the petitioner's application due to incomplete address details, pending tax liabilities, and alleged violations of tax rules.- The Court found no grounds to relieve the petitioner from providing the required particulars.- The Court directed the petitioner to respond to the authorities' demands within three weeks for further consideration of the cancellation application.**Issue 2: Input Tax Credit Compliance**- The authorities raised concerns about the petitioner availing ITC from suppliers whose registrations were retrospectively canceled.- The Court opined that as long as the petitioner could prove that the supplies were obtained from registered suppliers who paid their tax liabilities, retrospective cancellation of supplier registrations should not affect the petitioner's claim for ITC.- The Court directed the petitioner to submit supporting documents for the purchases from canceled suppliers to verify compliance with ITC conditions.**Issue 3: Compliance with Tax Rules**- The authorities alleged that the petitioner availed excess ITC and violated certain provisions of the CGST Act, leading to pending tax liabilities.- The Court emphasized the petitioner's obligation to respond and comply with the demands raised by the authorities.- The Court instructed the petitioner to address the issues raised before the competent authority within the specified timeframe for further consideration of the cancellation application.**Significant Holdings:**- The Court held that retrospective cancellation of supplier registrations should not automatically disqualify the petitioner from claiming ITC if the supplies were received from registered suppliers who fulfilled their tax obligations.- The Court directed the petitioner to address the concerns raised by the authorities regarding pending tax liabilities and compliance with tax rules to reconsider the cancellation application.In conclusion, the Delhi High Court directed the petitioner to address the authorities' concerns regarding address details, pending tax liabilities, and compliance with tax rules within a specified timeframe for further consideration of the voluntary cancellation of GST registration. The Court emphasized the importance of verifying the legitimacy of ITC claims and compliance with tax regulations before processing the cancellation application.