2023 (3) TMI 875 - HC - GST

Cancellation of GST registration of petitioner - effective date of cancellation - HELD THAT - There is no cavil that the petitioner s registration is required to be cancelled. The petitioner had applied for the same, stating its reason for seeking cancellation as discontinued its business/ closure of business - Although Respondent No. 1 had rejected the said application; it had proceeded to cancel the petitioner s registration, albeit with retrospective effect from 01.07.2017. After some arguments, Mr. Aggarwal, learned Counsel for the respondent submits that he has no objection if the petitioner s GSTIN registration is directed to be cancelled with effect from 11.01.2020 as prayed for by the petitioner - it is directed that the cancellation of the petitioner s registration will take effect from 11.01.2020. Petition disposed off.

Summary

Issues involved:
The issues involved in this case are the arbitrary cancellation of GST registration by Respondent No. 1, retrospective effect of cancellation, and the subsequent restoration of GSTIN.

Arbitrary Cancellation of GST Registration:
The petitioner filed a petition seeking the quashing of the Impugned Order dated 25 September 2020, where the GSTIN was cancelled by Respondent No. 1. The petitioner had initially applied for cancellation of the GST registration with effect from 31.12.2019. However, Respondent No. 1 issued a Notice on 04.02.2020, requesting submission of a stock statement, which the petitioner did not respond to. Subsequently, an order of rejection of the cancellation application was passed on 21.02.2020. Another notice proposing cancellation was issued on 15.09.2020, citing violations of invoicing rules. Finally, the registration was cancelled with retrospective effect from 01.07.2017, despite the petitioner's reason for cancellation being the discontinuation of business.

Retrospective Effect and Restoration of GSTIN:
The main contention was regarding the retrospective effect of the cancellation. Respondent No. 1 had rejected the application for cancellation but proceeded to cancel the registration retrospectively. During the proceedings, Respondent's counsel agreed to the cancellation of GSTIN from 11.01.2020, as requested by the petitioner. The Court directed the cancellation to take effect from 11.01.2020, clarifying that it would not prevent the initiation of proceedings for tax recovery as per the law. This decision effectively addressed the issue of retrospective cancellation while providing relief to the petitioner by restoring the GST registration from a later date.

Conclusion:
In conclusion, the High Court ruled in favor of the petitioner, directing the cancellation of GST registration to take effect from 11.01.2020, thereby resolving the issue of retrospective cancellation. The Court's decision balanced the interests of both parties by ensuring compliance with the law while mitigating the adverse impact on the petitioner.