Delhi High Court
M S Abhay Traders vs Commissioner Of Delhi Goods And ... on 3 April, 2024
Author: Sanjeev Sachdeva
Bench: Sanjeev Sachdeva
$~1
* IN THE HIGH COURT OF DELHI AT NEW DELHI
%
Date of decision: 03.04.2024
+ W.P.(C) 3858/2024 & CM APPL. 15900/2024 (Exemption)
M S ABHAY TRADERS .... Petitioner
versus
COMMISSIONER OF DELHI GOODS AND SERVICES TAX
AND ANOTHER. ..... Respondents
Advocates who appeared in this case:
For the Petitioner: Mr. Vinod Sabharwal, Mr. Sailender Verma &
Mr. Aditya Rai, Advocates.
For the Respondents: Mr. Rajeev Aggarwal, ASC with Ms. Samridhi
Vats, Advocate.
CORAM:-
HON'BLE MR. JUSTICE SANJEEV SACHDEVA
HON'BLE MR. JUSTICE RAVINDER DUDEJA
JUDGMENT
SANJEEV SACHDEVA, J. (ORAL)
1. Petitioner impugns order dated 03.02.2023 whereby the GST
registration of the Petitioner was cancelled retrospectively with effect
from 01.07.2017. Petitioner also impugns Show Cause Notice dated
24.09.2021.
2. Vide Show Cause Notice dated 24.09.2021, petitioner was
called upon to show cause as to why the registration be not cancelled
for the following reason:-
"Dealer has not filled returns for more than 3 months"
3. Subject petition has been filed by Sh. Abhay Munjal, legal heir
of Late Sh. Manoj Kumar Munjal, who was the proprietor of M/s
Abhay Traders and was registered under the Goods and Service Act,
2017 (hereinafter referred to as 'the Act').
4. Show Cause Notice dated 24.09.2021 was issued to the
petitioner. Though the notice does not specify any cogent reason, it
merely states "Dealer has not filed return for more than 3 months".
Further, the said Show Cause Notice also does not put the Petitioner to
notice that the registration is liable to be cancelled retrospectively.
Thus, the Petitioner had no opportunity to even object to the
retrospective cancellation of the registration.
5. Thereafter, the impugned order dated 03.02.2023 passed on the
Show Cause Notice dated 24.09.2021 does not give any reasons for
cancellation. 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
07/01/2022 in response to the notice to show cause dated 24/09/2021"
and the reason stated for the cancellation is "whereas no reply to
notice to show cause has been submitted". The order further states that
effective date of cancellation of registration is 01.07.2017 i.e., a
retrospective date.
6. Neither the Show Cause Notice, nor the order spell out the
reasons for retrospective cancellation. On the one hand, the order
states that no reply filed and on the other hand refers to a reply dated
07.01.2022, which shows complete non-application of mind,
particularly when the Proprietor had passed away and no reply was
filed.
7. Learned counsel for Petitioner submits that Sh. Manoj Kumar
Munjal passed away on 29.04.2021 and after the demise of the
proprietor, no business has been carried out.
8. He further submits that Mr. Abhay Munjal i.e., the son of late
proprietor is carrying on business under a separate name and separate
GST registration number and the subject GST registration has not
been used by the said legal heirs to conduct any business in the name
and style of the proprietorship concern of Late Sh. Manoj Kumar
Munjal.
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 not
mean that the taxpayer's registration is required to be cancelled with
retrospective date also covering the period when the returns were filed
and the taxpayer was compliant.
10. 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 this aspect but assuming that the respondent's contention in
required to consider this aspect while passing any order for
cancellation 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. It may be further noted that both the Petitioner and the
department want cancellation of the GST registration of the Petitioner,
though for different reasons.
12. In view of the above facts that Petitioner does not seek to carry
on business or continue with the registration, the impugned order
dated 03.02.2023 is modified to the limited extent that registration
shall now be treated as cancelled with effect from 29.04.2021 i.e., the
date when Sh. Manoj Kumar Munjal passed away. Petitioner shall
make the necessary compliances as required by Section 29 of the
Central Goods and Services Tax Act, 2017.
13. It is clarified that Respondents are also not precluded from
taking any steps for recovery of any tax, penalty or interest that may
be due in respect of the subject firm in accordance with law including
retrospective cancellation of the GST registration.
14. Petition is accordingly disposed of in the above terms.
SANJEEV SACHDEVA, J
RAVINDER DUDEJA, J
APRIL 03, 2024/SK
