2024 (1) TMI 232 - HC - GST

Cancellation of GST registration of petitioner with retrospective effect - non-filing of return for a continuous period of six months - HELD THAT - Absent anything more, this would not be sufficient ground to cancel the petitioner s registration even for the period during which the petitioner had filed its returns. Non-filing of returns for a period of six months or more cannot lead to the conclusion that the petitioner s GST registration is required to be cancelled even for the period while it was carrying on its business and duly filing its returns. In the present case, it is also important to note that the SCN did not indicate that the petitioner s GST registration was proposed to be cancelled with retrospective effect. Thus, the petitioner had no effective opportunity to contest the retrospective cancellation of its GST registration - The petitioner has stopped carrying on its business with effect from 19.10.2021 and, as noted above, had made a request for cancellation of its GST registration from that date. It is considered apposite to direct that the impugned order shall take effect from 31.12.2021, which is till the date the petitioner has filed its returns - ptition disposed off.

Summary

Issues involved:
The petitioner challenges the retrospective cancellation of their GST registration and the lack of effective opportunity to contest the same.

Judgment Summary:

Issue 1: Retrospective Cancellation of GST Registration
The petitioner's GST registration was cancelled with retrospective effect from the date it was granted, based on non-filing of returns for six months. The court held that cancellation with retrospective effect must be based on objective criteria and not arbitrary grounds. Non-filing of returns for a period cannot justify cancellation for the entire duration, especially when returns were filed during business operations. The court directed the cancellation to take effect from the date the petitioner filed their returns, emphasizing the need for proper officer scrutiny and objective criteria.

Issue 2: Lack of Effective Opportunity to Contest
The petitioner was not informed in the show cause notice (SCN) that cancellation with retrospective effect was proposed, depriving them of a chance to contest it effectively. The court noted the petitioner's request for cancellation from a specific date when they ceased business operations. Consequently, the court ordered the impugned order to be effective until the date of return filing, allowing the authorities to pursue statutory violations separately.

In conclusion, the petition was disposed of with the impugned order modified to reflect the date of return filing, ensuring fairness and adherence to objective criteria in GST registration cancellations.