No Retrospective Cancellation of GST Registration if SCN Does Not Properly Disclose Valid Reasons | HC
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- Last Updated on 19 February, 2025
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Case Details: Grand Auto Capital vs. Commissioner of Delhi Goods and Service Tax - [2025] 171 taxmann.com 105 (Delhi)
Judiciary and Counsel Details
- Yashwant Varma & Harish Vaidyanathan Shankar, JJ.
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Rajesh Mahna, Ramanand Roy, Mayank Kouts & Shiva Narang, Advs. for the Petitioner.
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Avishkar Singhvi, ASC, Naved Ahmed, Vivek Kr. Singh & Ms Sakshi Raman, Advs. for the Respondent.
Facts of the Case
The petitioner challenged an order dated 27.07.2024, which retrospectively cancelled its GST registration from 01.04.2022. The cancellation proceedings were initiated based on a Show Cause Notice (SCN) issued on 16.05.2024. However, the SCN did not indicate any intent or reason for retrospective cancellation. The petitioner argued that the retrospective cancellation was arbitrary and violated the principles of natural justice, as they were not given prior notice. The petitioner also contended that the SCN did not mention retrospective cancellation, violating Section 29 of the CGST Act, 2017, and that retrospective cancellation cannot be exercised mechanically without an objective basis.
The respondent contended that cancellation under Section 29(2) of the CGST Act allows for retrospective cancellation in cases of non-compliance, and the petitioner had not filed returns for the relevant period, justifying the cancellation.
High Court Held
The Delhi High Court held that retrospective cancellation must be supported by specific reasons in the SCN. The failure to provide reasons in the original SCN and the lack of prior notice for retrospective cancellation invalidated the impugned order. Therefore, the Court modified the cancellation order, stating that the cancellation would take effect prospectively from the date of the SCN (16.05.2024) and not retrospectively from 01.04.2022.
List of Cases Reviewed
- Riddhi Siddhi Enterprises v. Commissioner of Goods and Services Tax (CGST), South Delhi & Anr. (W.P.C 8061/2024 dated 25 September 2024)(Para 4) followed.
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