Delhi HC: GSTIN Cancellation Initially from Date It Was Given Due to Non-filing of GST Return for 6 Month is Invalid

The Delhi High Court has ruled that the cancellation of Goods and Service Tax (GST) registration granted to Balajee Plastomers Private Limited is not valid ab initio, starting from the date it was initially ordered, due to the non-filing of returns for six months. The petitioner had challenged the impugned order that cancelled their GST registration retrospectively from 01.07.2017.

The petitioner stated that they were registered under the Central Goods and Services Tax Act, 2017 (CGST Act) from 01.07.2017. They continued their business operations and adhered to all the provisions of the CGST Act after registration, even after compliance, they faced adverse circumstances in 2019.

Upon receiving the response, the petitioner opted to surrender their GST registration and submitted an application for cancellation on November 28, 2019. The petitioner claimed that the cancellation should be effective from that date, as they had fulfilled all their GST obligations for the preceding period and submitted all the returns before November 2019.

After the respondent issued a notice requesting additional information about the cancellation application, the petitioner failed to provide a response. As a result, the application for cancellation was ultimately rejected.

Subsequently, on 08.07.2020, the petitioner applied again for cancellation of their GST registration with effect from 28.11.2019. The petitioner alleged that respondent No. 2 sent a notice concerning this application on 16.09.2020, which was beyond the stipulated period. Therefore, the petitioner believed their GST registration was cancelled. However, their application for cancellation was disapproved by an order dated 05.11.2020.

Subsequently, the concerned officer issued a Show Cause Notice on 13.01.2021, suggesting the cancellation of the petitioner’s GST registration due to the non-submission of returns for a consecutive six-month period. Starting from 13.01.2021, the GST registration was also suspended. The disputed order retroactively cancelled the petitioner’s GST registration from 01.07.2017.

The court, comprising Justice Vibhu Bakhru and Justice Amit Mahajan, observed that the impugned order did not provide any reason for cancelling the petitioner’s registration, apart from the non-response to the Show Cause Notice. The petitioner argued that they had ceased operations in 2019 and applied for revocation of their GST registration from 28.11.2019.

Considering the absence of a valid reason for revoking the GST registration retroactively from 01.07.2017, the court held that respondent No. 2’s directive cannot be upheld. It was noted that the revocation was based on the petitioner’s failure to submit returns for six months, which cannot be grounds for cancelling the GST registration ab initio from the date it was allowed.

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Consequently, the court directed that the petitioner’s GST cancellation should be effective from 28.11.2019 rather than 01.07.2017.