Order Cancelling Registration With Retrospective Effect to Be Modified, Providing Cancellation From Date of SCN | HC

Case Details: Radha Rani Metal vs. Principal Commissioner of Goods and Service Tax North Delhi - [2025] 172 taxmann.com 246 (Delhi)

Judiciary and Counsel Details

• Yashwant Varma & Harish Vaidyanathan Shankar, JJ.
• Pranay Jain, Adv. for the Petitioner.
• Aakarsh Srivastava, Standing Counsel & Anand Pandey, Adv. for the Respondent.

Facts of the Case

The petitioner, a registered assessee under the Central Goods and Services Tax Act, 2017 (CGST Act), was subjected to cancellation proceedings initiated through a Show Cause Notice (SCN). The SCN did not indicate any intent or justification for retrospective cancellation. However, the revenue authorities subsequently passed an order cancelling the petitioner’s GST registration with retrospective. Aggrieved by the retrospective cancellation, the petitioner challenged the impugned order, contending that the absence of prior notice regarding the retrospective effect and the failure to provide reasons in the SCN rendered the order legally unsustainable. The petitioner argued that Section 29 of the CGST Act mandates adherence to due process and that any retrospective cancellation must be specifically proposed and justified within the SCN to afford the assessee an opportunity to respond appropriately.

High Court Held

The Hon’ble High Court held that the impugned order was invalid due to the absence of reasons in the SCN justifying retrospective cancellation and the failure to place the petitioner on prior notice of such an intent. The Court emphasized that retrospective cancellation affects substantive rights and cannot be effectuated without explicit notice and reasoning in the SCN. Accordingly, the Court modified the cancellation order, directing that the petitioner’s GST registration cancellation shall take effect from the date of the SCN. Consequently, the stipulation in the impugned order providing for retrospective cancellation was quashed.

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
• Delhi Polymers v. Commissioner, Trade and Taxes & Anr. (para 4) followed