Delhi High Court
Green Work Metal vs Principal Commissioner Of Gst & Anr. on 9 February, 2024
Author: Sanjeev Sachdeva
Bench: Sanjeev Sachdeva
$~25
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of decision: 09.02.2024
+ W.P.(C) 1930/2024 & CM APPL. 8100/2024 (Exemption)
GREEN WORK METAL ..... Petitioner
versus
PRINCIPAL COMMISSIONER OF GST & ANR. ..... Respondents
Advocates who appeared in this case:
For the Petitioner: Mr. Abhinav Garg, Mr. Pankaj, Mr. Ram Mohan
Singh, Mr. Manwendra Gautam & Ms. Aadyaantya,
Advocates.
For the Respondent: 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 seeks direction to respondent to cancel the GST
registration of the petitioner with effect from 16.01.2021 and impugns
order dated 08.02.2021 whereby the GST registration of the petitioner
was cancelled retrospectively with effect from 11.09.2017.
2. Vide Show Cause Notice dated 29.01.2021, petitioner was
called upon to show cause as to why the registration be not cancelled
for the following reasons:-
"Collects any amount as representing the tax but fails to pay
the same to the account of the Central/State Government
beyond a period of three months from the date on which such
payment becomes due."
3. Petitioner was the proprietor of Green Work Metal and was in
business of trading goods like stranded wire, cable, plated bands, and
similar copper articles without electrical insulation and was registered
under Goods and Services Tax Act, 2017.
4. Petitioner had submitted an application seeking Cancellation of
Registration Certificate on 16.01.2021 on ground of discontinuation of
business.
5. Pursuant to the said application, notice was issued by the
respondent on 18.01.2021 seeking additional information and
documents relating to application for cancellation of registration.
6. Said application for cancellation was rejected vide order dated
27.01.2021. Though the order rejects it on the ground of an
unsatisfactory reply, the order does not specify any specific cogent
reason for the same.
7. It appears that the respondents are using a template for issuing
said order without providing any particulars. There is no clarity as to
why the reply has been found to be unsatisfactory.
8. Thereafter, on 29.01.2021, Show Cause Notice was issued to
petitioner on the ground that "collects any amount as representing the
tax but fails to pay the same to the account of the Central/State
Government beyond a period of three months from the date on which
such payment becomes due".
9. It may be noticed that the impugned order dated 08.02.2021
states that the registration is liable to be cancelled for the following
reason "whereas no reply to notice to show cause has been
submitted". The order also seeks to cancel the registration with
retrospective effect from 11.09.2017. However, there is no material on
record to show as to why the registration is sought to be cancelled
retrospectively.
10. The Show Cause Notice dated 29.01.2021 also does not put the
petitioner to notice that the registration is liable to be cancelled
retrospectively. Accordingly, petitioner had no opportunity to even
object to the retrospective cancellation of the registration.
11. In terms of Section 29(2) of the Central Goods and Services Tax
Act, 2017, 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.
12. 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
this regard is correct, it would follow that the proper officer is also
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.
13. Records clearly demonstrate that the Petitioner had submitted
an application seeking cancellation of the GST registration on
16.01.2021 which was rejected and thereafter, vide order dated
08.02.2021, the registration of the petitioner has been cancelled
retrospectively with effect from 11.09.2017.
14. It is clear that both the petitioner and the respondent want the
GST registration to be cancelled, though for different reasons.
15. In view of the above facts and circumstances, the petition is
allowed. The order of cancellation is modified to the extent that the
same shall operate with effect from 16.01.2021, i.e., the date of the
petitioner's application for cancellation of registration.
16. However, petitioner shall furnish all requisite details to the
respondents as required to be submitted by the petitioner in respect of
notice dated 18.01.2021 to enable the respondents to ascertain if any
demand is liable to be raised against the petitioner.
17. 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 from the petitioner in accordance with law.
18. The petition is accordingly disposed of in the above terms.
SANJEEV SACHDEVA, J
RAVINDER DUDEJA, J
FEBRUARY 09, 2024/sk
