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TMI Blog2024 (10) TMI 278X X X X Extracts X X X X X X X X Extracts X X X X ..... is also necessary to observe that the mere existence of such a power would not in itself be sufficient to sustain its invocation. It is emphasised that the power to cancel retrospectively can neither be robotic nor routinely applied unless circumstances so warrant. When tested on the aforesaid precepts it becomes ex facie evident that the impugned order of cancellation cannot be sustained. While dealing with the right of the respondents to cancel GST registration with retrospective effect and the manner in which such power should be exercised in accordance with the statutory scheme was an issue which was noticed in Ramesh Chander vs Assistant Commissioner of Goods and Services Tax, Dwarka Division, CGST Delhi Anr. [ 2024 (1) TMI 1014 - DELHI HIGH COURT] . The Court in Ramesh Chander taking note of the contours of Section 29 had held that ' It is important to note that, according to the respondent, one of the consequences for cancelling a tax payer s registration with retrospective effect is that the taxpayer s customers are denied the input tax credit availed in respect of the supplies made by the tax payer during such period. Although, we do not consider it apposite to examine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. 3. It may be noted that a registered person furnishing return under sub-section (1) of section 39 of the CGST Act, 2017 is required to furnish a final return in FORM GSTR-10 within three months of the date of this order. 4.You are required to furnish all your pending returns. 5.It may be noted that the cancellation of registration shall not affect the liability to pay tax and other dues under this Act or to discharge any obligation under this Act or the rules made thereunder for any period prior to the date of cancellation whether or not such tax and other dues are determined before or after the date of cancellation. 4. The power to cancel a registration under the Central Goods and Services Tax Act, 2017 [CGST Act] with retroactive effect stands enshrined in Section 29 which reads thus:- 29. Cancellation[or suspension] of registration . (1) The proper officer may, either on his own motion or on an application filed by the registered person or by his legal heirs, in case of death of such person, cancel the registration, in such manner and within such period as may be prescribed, having regard to the circumstances where, (a) the business has been discontinued, transferred fully fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ancelled shall pay an amount, by way of debit in the electronic credit ledger or electronic cash ledger, equivalent to the credit of input tax in respect of inputs held in stock and inputs contained in semifinished or finished goods held in stock or capital goods or plant and machinery on the day immediately preceding the date of such cancellation or the output tax payable on such goods, whichever is higher, calculated in such manner as may be prescribed: Provided that in case of capital goods or plant and machinery, the taxable person shall pay an amount equal to the input tax credit taken on the said capital goods or plant and machinery, reduced by such percentage points as may be prescribed or the tax on the transaction value of such capital goods or plant and machinery under Section 15, whichever is higher. (6) The amount payable under sub-section (5) shall be calculated in such manner as may be prescribed. 5. As is manifest from a reading of Section 29, clauses (a) to (e) of Section 29(2) constitute independent limbs on the basis of which a registration may warrant cancellation. While the provision does enable the respondents to cancel that registration with retrospective effe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umping stations and related works; transformer stations and related works, General construction services of local water sewage pipelines, electricity and communication cables related works, Installation, assembly and erection services of other prefabricated structures and constructions and possessed a GST registration. 4. A show cause notice was issued to the petitioner on 07.04.2022 Though the notice does not specify any cogent reason, there is an observation in the notice stating failure to furnish returns for a continuous period of six months. The show cause notice requires the petitioner to appear before the undersigned i.e. authority issuing the notice. Notice does not give the name of the officer or place or time where the petitioner has to appear. 5. Further the order dated 13.07.2022 passed on the show cause notice does not give any reasons for cancellation of the registration. It, however, states that the registration is liable to be cancelled for the following reason whereas no reply to notice to show cause has been submitted''. However, the said order in itself is contradictory, the order states reference to your reply dated 16.04.2022 in response to the notice t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellation of GST registration with retrospective effect. Thus, a taxpayer s registration can be cancelled with retrospective effect only where such consequences are intended and are warranted. 11. The show cause notice does not even state that the registration is liable to be cancelled from a retrospective date. 12. The petition is allowed. The impugned show cause notice dated 07.04.2022, order of cancellation dated 13.07.2022 and the order in appeal dated 29.12.2023 are accordingly set aside. GST registration of the petitioner is restored, subject to petitioner filing requisite returns upto date. 13. It is clarified that since the petitioner could not have filed the return after the GST registration was suspended, there shall be no liability to pay any penalty or fine for delayed filing. However, this would only apply in case petitioner files an affidavit of undertaking that petitioner has not carried out any business or raised invoices or taken any Input Tax Credit after the registration was suspended with effect from 07.04.2022 i.e., the date of suspension of the registration. 14. Respondent would be at liberty to initiate appropriate proceedings in accordance with law after givi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, in our view, order dated 15.12.2021 does not qualify as an order of cancellation of registration. On one hand, it states that the registration is liable to be cancelled and on the other, in the column at the bottom there are no dues stated to be due against the petitioner and the table shows nil demand. 7. Learned Counsel for the Petitioner submits that the said order reflected that the GST registration of petitioner stands cancelled from 01.07.2017 even though returns thereafter have been filed by the Petitioner. 8. He further submits that the petitioner is no longer interested in continuing the business and the business has been discontinued. 9. In terms of Section 29(2) of the Act, the proper officer may cancel the GST registration of a person from such date including any retrospective date, as he may deem fit if the circumstances set out in the said sub-section are satisfied. Registration cannot be cancelled with retrospective effect mechanically. It can be cancelled only if the proper officer deems it fit to do so. Such satisfaction cannot be subjective but must be based on some objective criteria. Merely, because a taxpayer has not filed the returns for some period does no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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