Retrospective Cancellation of GSTIN should not Cover the Period when Taxpayer was Compliant and Filed the Returns
Legality of Retrospective Cancellation Only Due to Non-filing of Returns: In a recent ruling on 18 January 2024, the Delhi High Court, in case of Aryan Timber Store vs STO [Case No. WP(C)628/2024 & CM APPLS 2748-2749/2024], clarified that the cancellation of Goods and Services Tax Identification Number (GSTIN) cannot be applied retrospectively solely on grounds of non-filing of returns. Justices Sanjeev Sachdev and Ravinder Dudeja, presiding over the case, emphasized that retroactive cancellation should not cover periods when taxpayers were in compliance and filed their returns.
The petitioner, who ceased business operations on March 31, 2019, had requested the cancellation of GST registration on May 6, 2019. However, a retrospective cancellation order was issued, effective from July 1, 2017, accompanied by a GST Show Cause Notice.
The court noted that the cancellation order lacked supporting evidence justifying its retrospective nature. Additionally, the Show Cause Notice failed to adequately inform the petitioner about the consideration of retrospective cancellation, depriving them of the opportunity to raise objections.
Upon the petitioner’s application for GST registration cancellation, the registration was annulled, relieving them from the obligation to file further returns. The court deemed the rationale for cancelling registration based solely on the failure to file returns untenable, particularly given the retrospective nature of the cancellation.
Citing Section 29(2) of the Central Goods and Services Tax (CGST) Act, 2017, the court acknowledged the competent officer’s authority to cancel GST registration, specifying the effective date, which may include a retrospective one, under certain conditions.
The court emphasized that the process of cancelling registration with retrospective impact should not be mechanical. Non-filing of returns for a specific period should not automatically trigger retrospective cancellation, especially if the taxpayer remained compliant during the filing of returns.
This Delhi High Court ruling provides clarity on the limitations of retrospective cancellation, highlighting the importance of evidence and due process in such cases. Businesses should be aware of these considerations to ensure fair treatment in GST registration cancellation matters.
To Access GST Advisory 623 CLICK HERE
Also Read
Patna High Court Imposes Fine on GST Officer for Unlawful Tax Recovery
Ghaziabad Businessman Files FIR Against GST Officials for Alleged Bribery Demand
Thank you I have just been searching for information approximately this topic for a while and yours is the best I have found out so far However what in regards to the bottom line Are you certain concerning the supply
What i do not understood is in truth how you are not actually a lot more smartlyliked than you may be now You are very intelligent You realize therefore significantly in the case of this topic produced me individually imagine it from numerous numerous angles Its like men and women dont seem to be fascinated until it is one thing to do with Woman gaga Your own stuffs nice All the time care for it up