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2024 (3) TMI 628 - DELHI HIGH COURTCancellation of GST registration with retrospective effect - Application seeking cancellation of GST registration rejected - taxpayer found non-existent at the principal place of business - thereafter, defective Show Cause Notice issued - HELD THAT:- Clearly, the order for cancellation on the ground that petitioner was found non-existent on 30.05.2023 ex-facie is not sustainable for the reason that on 12.04.2023, petitioner had himself applied for cancellation of registration on the ground of closure of business. It is but obvious that on 30.05.2023, when an inspection was carried out, petitioner was not found available at the subject premises. The Show Cause Notice dated 06.06.2023 does not bear the name and designation of the officer issuing the Show Cause Notice, though it required the petitioner to appear before the issuer of the notice. Further, the order of cancellation dated 15.06.2023 also does not give any reasons. It merely states “reference to the Show Cause Notice issued dated 06.06.2023” and then states that “the effective date of cancellation of registration is 26.10.2023” i.e., a retrospective date. 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. It is important to note that, according to the respondent, one of the consequences for cancelling a taxpayer’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. Thus, the impugned order dated 15.06.2023 and the Show Cause Notice dated 06.06.2023 are modified to the extent that the registration of the petitioner shall now be deemed cancelled with effect from 12.04.2023 i.e., when the petitioner applied for cancellation of registration. Petitioner shall make the necessary compliances as required by Section 29 of the Central Goods and Services Tax Act, 2017. 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. Petition is accordingly disposed of in the above terms.
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