Delhi HC: GST Registration Shall Be Cancelled on the Date of Filing of the Application Seeking Cancellation

In its recent ruling, the Delhi High Court has instructed the Goods and Service Tax (GST) registration cancellation, aligning with the date on which the application for cancellation of the registration was filed.

The petitioner, Saroj Gagneja, filing a writ petition contested the directive whereby her GST registration was retroactively revoked. The petitioner had been registered under the GST by the name ‘M/s S. S. Enterprises’ and possessed a Goods and Service Tax Identification Number since 01.07.2017.

The petitioner decided to cease business activities in January 2020 and applied on 17.01.2020, seeking the cancellation of her GST registration from that specific date. However, the respondent did not promptly address the request and took more than six months to respond. It was only on 19.07.2020 that an officer from the GST department sent a notice asking for an explanation regarding the revocation of the application, to which the petitioner duly replied.

Despite the petitioner’s compliance, the respondent failed to take immediate action to cancel her GST registration. Eventually, on 20.09.2021, the application requesting the cancellation was rejected with the reason provided as “Document not show on Portal.” Subsequently, the proper officer issued a directive and cancelled the petitioner’s GST registration retroactively from 01.07.2017, citing the absence of a response to the show-cause notice without providing any specific explanation.

During the court proceedings, Shreya Gagneja, the counsel representing the petitioner, argued that the reasons provided for cancelling the registration were unjustified. She contended that the closure of the business in January 2020 and the failure to file GST returns thereafter should not be considered sufficient grounds for cancellation. Additionally, she highlighted that the order lacked proper justification and failed to explain the retrospective effect.

It was noted by the panel that the failure to file returns after closing the business in January 2020 should not be considered sufficient clarification for cancelling the registration during the period of compliant business operations. Therefore, the petitioner’s GST registration should not be revoked, as advised stated in the show cause notice. The directive cancelling the registration did not have proper justification and was liable to be overruled.

After careful examination of the facts and arguments presented, a division bench comprising Justice Vibhu Bakru and Justice Amit Mahajan ordered the revocation of the Goods and Service Tax (GST) registration on the same date as the application requesting the cancellation. Rajeev Aggarwal represented the revenue during the court proceedings.