Delhi High Court
Indotech Magnetics vs Commissioner Of Delhi Goods And Service ... on 3 January, 2024
Author: Sanjeev Sachdeva
Bench: Sanjeev Sachdeva
$~3
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of decision: 03.01.2024
03.01.2024.
+ W.P.(C) 16380/2023 & CM APPL. 65948/2023
INDOTECH MAGNETICS ..... Petitioner
versus
COMMISSIONER OF DELHI GOODS AND SERVICE TAX &
ANR. ..... Respondent
Respondents
Advocates who appeared in this case:
For the Petitioner: Mr. Rajesh Mahna, Mr. Ramanand Roy & Mr. Mayank
Kouts, Advocates.
For the Respondents:
Respondent Mr. Rajeev Aggarwal with Ms. Samridhi Vats, Advocates
CORAM:-
HON'BLE MR. JUSTICE SANJEEV SACHDEVA
HON'BLE MR. JUSTICE RAVINDER DUDEJA
JUDGMENT
SANJEEV SACHDEVA, J. (ORAL)
1. Issue notice.
2. Mr. Aggarwal, learned counsel appearing for the respondents
accept notice.
3. Petitioner has filed the present petition impugning an order dated
11.10.2023 (hereafter the impugned order), whereby the petitioner's GST
registration was cancelled with retrospective
retro effect.
4. Petitioner was registered with the GST authority with effect from
16.07.2023. The petitioner claims that he was carrying on the business
under the name of 'M/s Indotec Magnetics' and was assigned Goods and
Service Tax Identification Number
Number (GSTIN) 07AAAFI8460N1ZZ.
Petitioner claims that they discontinued the business w.e.f. 01.04.2020
and filed an application dated 29.05.2020 praying that the GST
registration be cancelled with effect from the said date. Respondent did
not act on the said
said request for over one year. However, on 11.01.2022,
the concerned officer of GST department issued a notice on the ground
that no return had been filed for over six months
5. The proper officer issued a show cause notice dated 11.01.2022
(hereafter 'thee SCN'),
SCN ), proposing to cancel the petitioner's GST
registration for the following reasons: -
"1 Any Taxpayer other than composition taxpayer has
not filed returns for a continuous period of six
months".
6. Petitioner was called upon to respond to the SCN within a period
of seven working days and to appear before the concerned officer for
personal hearing "on the appointed date and time", failing which the
petitioner was cautioned that their case would be decided ex-parte.
Additionally, the petitioner's
petitioner's GST registration was suspended with effect
from the date of the SCN, i.e. 11.01.2022.
7. Thereafter, the proper officer passed the impugned order cancelling
the petitioner's GST registration with retrospective effect from
01.07.2017. The impugned order does not indicate any reason for
cancelling the petitioner's GST registration except mentioning that no
reply has been received to the SCN.
8. 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
sub on are satisfied. The
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.
9. It iss 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
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.
10. In the present case, the petitioner
petitioner had indicated that she closed the
business w.e.f 01.04.2020. Thus, not filing returns, thereafter, cannot be
a ground to cancel the registration in respect of the period while
petitioner was carrying on the business in compliance with the provisions
of the law.
11. As noted above, the SCN proposing to cancel the petitioner's GST
registration is flawed. The impugned order cancelling the petitioner's
GST registration is also liable to be set aside as it is bereft of any reason.
It neither specifies the reason for cancelling the GST registration nor
gives any clue as to why it was cancelled with retrospective effect.
12. In view of the above, we consider it apposite to allow the present
petition and direct that the cancellation of the petitioner's GST
registration shall take effect from 29.05.2020, being the date of the
application filed by the petitioner seeking cancellation of the GST
registration.
13. It is clarified that this order would not preclude the respondent from
initiating any steps in accordance
accordance with law, if it is found that the
petitioner had violated any provisions of the Act prior to 29.05.2020.
14. The petition is allowed in the aforesaid terms. All pending
applications are also disposed of.
SANJEEV SACHDEVA, J
January 03, 2024/sk
2024/ RAVINDER DUDEJA
DUDEJA, J
