The High Court set aside the impugned order, referring to the case of Riddhi Siddhi Enterprises vs. Commissioner of Goods and Services Tax (CGST), South Delhi & Anr. (2024).
The Delhi High Court has ruled that an order cancelling a trader’s GST registration with retrospective effect will not stand unless the show cause notice (SCN) clearly outlines both the reasons for the cancellation and the authority’s intent to apply it retrospectively.
A division bench comprising Justices Yashwant Varma and Harish Vaidyanathan Shankar emphasized that the absence of specific reasons in the original SCN and the failure to notify the petitioner about the proposed retrospective cancellation invalidate the order.
Key Observations by the Court
The court stated:
“In the absence of reasons having been assigned in the original SCN in support of a proposed retrospective cancellation as well as a failure to place the petitioner on prior notice of such an intent clearly invalidates the impugned action.”
The HC set aside the impugned order, referring to the case of Riddhi Siddhi Enterprises vs. Commissioner of Goods and Services Tax (CGST), South Delhi & Anr. (2024). In that case, the court held that the mere power to cancel GST registration with retrospective effect under Section 29 of the Goods and Services Tax Act, 2017 does not justify such a revocation unless the order itself reflects the reasons behind the cancellation.
The court further clarified:
“The order under Section 29(2) must itself reflect the reasons which may have weighed upon the respondents to cancel registration with retrospective effect. Given the harmful consequences of retroactive cancellation, it is essential that the order be well-reasoned and demonstrate proper application of mind.”
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Liberty for Fresh Action with Proper Notice
The High Court allowed the petition while granting the Department the liberty to initiate action against the petitioner only after duly informing them about the material grounds on which the opinion under Section 29(2)(e) is based.
Case Details
- Case Title: JSD Traders LLP v. Additional Commissioner, GST
- Case No.: W.P.(C) 2608/2025
- Petitioner’s Counsel: Mr. Rana Gurtej Singh, Advocate
- Respondent’s Counsel: Ms. Sushila Narang, Advocate
This judgment reinforces the principle that retrospective cancellation of GST registration must be based on clearly stated reasons and prior notice to the affected party, ensuring fair treatment and due process under GST law.
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