Delhi HC: GSTIN Cancellation Must Be Stay from Biz Discontinuation Date, Not Deemed Retrospectively

As a taxpayer has not filed the GST returns for a certain duration does not imply that the registration of the assessees is required to be cancelled with a retrospective date also covering the period when the returns were filed and the assessee was compliant, Justices Sanjeev Sachdeva and Ravindra Dudeja noted.

The Delhi High Court addressed a case where the applicant challenged the retrospective cancellation of their GST registration. The applicant, operating under the name M/S Dashmesh Wires and Cables ( India ), engaged in the manufacturing of copper wire and cables. They filed GST returns regularly and claimed input tax credit ( ITC ) through the GST Portal.

The problem arises when the applicant closes their business and makes their premises vacate, applying for the cancellation of their registration certificate on 31st March 2020.

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The application was rejected without furnishing any particular causes. A SCN was issued directing to the retrospective cancellation of registration from 1st July 2017, without precise justification.

The court addressed the results of retrospective cancellation towards the input tax credit (ITC) of the applicant’s client, underscoring the requirement for the proper officer to acknowledge these implications before creating a decision.

The court changed the cancellation order to be useful from the date of business discontinuation, March 31, 2020, while permitting the authorities to seek recovery of any outstanding dues following the law.