Order Date – 14 March 2024

Parties: RR Balaji AD Vs Commissioner of SGST Delhi & Ors.

Facts –

• The Petitioner, RR Balaji AD, was served with a show cause notice without specifying any cogent reason, also does not put the petitioner to notice that the registration is liable to be cancelled retrospectively.
• The impugned order passed cancelling the registration with retrospective date stating that the taxpayer has not responded to the notices issued u/s 61 of GST Act.

Issue –

• Whether the cancellation of registration with retrospective date is proper and valid?

Order –

• The Divisional Bench of Hon’ble High Court observed that the Show Cause Notice and the impugned order are bereft of any details accordingly the same cannot be sustained. Neither the Show Cause Notice, nor the order spell out the reasons for retrospective cancellation.
• 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.
• 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 taxpayer during such period. Thus, a taxpayer’s registration can be cancelled with retrospective effect only where such consequences are intended and are warranted.
• The order dated 19.04.2022 is set aside. The GST registration of the petitioner is restored.