2024 (1) TMI 235 - HC - GST

Cancellation of petitioner s GST registration with retrospective effect from 01.01.2019 - it is the petitioner s case that it closed its business on 08.02.2021, accordingly, the GST registration was required to be maintained for the period with effect from 01.01.2019 to 08.02.2021 - HELD THAT - It is settled law that an authority which is charged with performing a statutory duty has to independently satisfy itself of the reasons for taking such decisions. It is trite law that such authority cannot act on the dictation of another authority. In the present case, the impugned order does not indicate any reason for cancellation of the petitioner s GST registration with the retrospective date, that is, from 01.01.2019. More importantly, the SCN also did not mention that the petitioner s GST registration was proposed to be cancelled with retrospective effect from 01.01.2019. Thus, the petitioner was provided no opportunity to contest the cancellation of the GST registration with retrospective effect. Since, the petitioner had filed an application for cancellation of its GST registration, it was not averse to cancellation of its GST registration prospectively, and, therefore, had no reason to contest the SCN. There is also no material on record to indicate that the petitioner was non-existent as on 01.01.2019 or at any time prior to 08.02.2021. This Court considers it appropriate to direct that the impugned order cancelling the petitioner s GST registration be effective from 08.02.2021 - Petition disposed off.

Summary

Issues involved:
The cancellation of GST registration with retrospective effect from 01.01.2019, failure to provide reasons for cancellation, lack of opportunity to contest the retrospective cancellation, and non-existence of the petitioner prior to 08.02.2021.

Cancellation of GST Registration:
The petitioner challenged the cancellation of its GST registration with retrospective effect from 01.01.2019, following a show cause notice (SCN) based on the party being deemed non-existent. The petitioner had applied for cancellation on 08.02.2021 after closing its business, but subsequent applications were rejected due to non-response to additional information requests. The impugned order did not provide reasons for the retrospective cancellation, and the SCN did not mention the retrospective aspect, depriving the petitioner of a chance to contest it.

Failure to Provide Reasons:
The court highlighted that the authority must independently assess reasons for decisions and cannot act on another authority's dictation. In this case, there was no evidence of the petitioner being non-existent before 08.02.2021, and the order lacked justification for the retrospective cancellation. The petitioner was not informed of the grounds for non-existence, violating procedural fairness.

Judgment and Direction:
The court directed that the cancellation of GST registration be effective from 08.02.2021, granting relief to the petitioner. However, if the respondents intend to cancel registration retrospectively before 08.02.2021, a new show cause notice must be issued with clear reasons, allowing the petitioner a fair opportunity to respond. The order does not prevent the authorities from pursuing statutory violations or recovering due amounts from the petitioner in accordance with the law.