Delhi High Court states that reasons for canceling GST registration retroactively must be included in the show-cause notice.

The Delhi High Court has emphasized that for authorities to revoke GST Registration retroactively, the reasons must be clearly stated in the Show-Cause Notice. The Court was reviewing a Writ-Petition that requested the cancellation of GST registration from the date of the cancellation application, not retroactively. The bench, consisting of Justice Yashwant Varma and Justice Dharmesh Sharma, stated, “In the absence of any reasons in the SCN for the respondents to cancel registration retroactively, we cannot uphold the contested order.” The Petitioner was represented by Advocate N.K. Sharma, while SPC Shreya Bhardwaj represented the Respondent for the Union of India.

The Petitioner had previously submitted a request to cancel its registration under the Central Goods and Services Tax Act, 2017 on January 30, 2021. In response to this request, the respondents issued a notice on February 1, 2021, asking for more information. However, since the petitioner did not reply, a final order was issued on February 13, 2021, denying the cancellation request. Subsequently, a Show Cause Notice was issued on January 15, 2023, based on the claim that the petitioner failed to submit returns as required under Section 39 of the Act for six consecutive months.

The Petitioner submitted a reply on 15 February 2023. However, the Respondent claimed that no response was received from the taxpayer and pointed out that the petitioner had wrongly claimed ITC benefits. The Court noted that it did not need to address these issues because the current writ petition focused only on the retrospective cancellation of the petitioner’s registration under the Act. Discussing the authority given by Section 29 of the Act, the court referenced its decision in Riddhi Siddhi Enterprises vs. Commissioner of Goods and Services Tax (CGST), South Delhi & Anr. It emphasized that the Show-Cause Notice must clearly state the reasons for the retrospective cancellation of GST Registration, as it is essential for the order to be well-reasoned and show proper consideration. The petition was therefore granted.

Cause Title: M/S Akash Garments India Pvt. Ltd. vs. Union of India & Anr.
Appearances:
Petitioner: Advocate N.K. Sharma
Respondent: SPC Shreya Bhardwaj for UOI, SSC Harpreet Singh, Advocate Suhani Mathur, Advocate Shivang Chawla