Delhi HC Directs GST Dept to Cancel GSTIN from Death Date of the Proprietor Instead Retrospectively

The Delhi High Court referred the Goods and Service Tax (GST) department to cancel the GST registration from the date of the death of the proprietor instead of retrospectively from the beginning of the GST commission dated July 1, 2017, because of non-filing of GST Returns (GSTR).

The order on July 31, 2019, is been contested by the petition, where the GST registration of the applicant was cancelled retrospectively from July 1, 2017. The applicant challenged a Show Cause Notice ( SCN ) issued dated July 17, 2019, which quoted the cause for possible cancellation as failure to file GST returns for a successive period of 6 months.

The applicant, Praphul Mohan Aggarwal, the legal heir of the Late Krishan Mohan, who was registered under the Goods and Service Act, 2017, claimed against the retrospective cancellation.

The counsel of the applicant shows that the business ceased operations, and the petitioner, his son, had not conducted any business under the same proprietorship after the demise of Krishan Mohan dated March 14, 2018.

The court noted that while Section 29(2) of the Act authorizes retrospective cancellation, these measures should be on the grounds of the objective criteria and not just non-filing of returns. Retrospective cancellation has implications for customers’ input tax credit and, therefore requires precise consideration.

SCN is not able to show the possibility of the retrospective cancellation and both parties asked for the cancellation albeit for distinct reasons.

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The bench of Justices Sanjeev Sachdeva and Ravinder Dudeja, regarding the objective of the petitioner to stop the business and registration, revised the order to cancel the registration effective from the date of the proprietor’s demise, March 14, 2018.

The respondents have the privilege to recover any due tax, penalty, or interest, including through retrospective cancellation, under the law.