Delhi HC: GSTIN Cancellation Can Take Effect from the Date of the Notice

The Hon’ble Delhi High Court in the case of Varyam Dass Khurana v. Commissioner of GST, New Delhi [W.P. (C) No. 15670 of 2023 dated December 05, 2023] ruled that the cancellation of registration must take effect from the issuance date of Show Cause Notice, and not retrospectively.

Key Information

Late Mr. Varyam Dass Khurana was in the business of supplying building materials cement, dust, bricks, etc., from his principal place of business. He died on January 02, 2019, and one of his sons Mr. Sanjay Khurana, took charge of the business. He filed returns regularly and applied for cancellation of GST registration which was in favour of the Late Mr Varyam Dass Khurana on February 17, 2020. The stated application was recognized. Hence, the Commissioner of GST (“the Respondent”) issued a SCN asking for additional information concerning the said application.

The Respondent released an Order (“Impugned Order”) dated May 29, 2020, whereby the GST registration was cancelled, w.e.f. July 04, 2017.

Hence, lockdown was levied at the time of the Covid period. Hence, a personal hearing can not be conducted. Thus, Mr. Sanjay Khurana died on April 28, 2021.

Read Also: Delhi HC: Some Factual Criteria Must Underlie Before Decision of GSTIN Cancellation

Therefore, disappointed by the Impugned Order the present writ was filed by the Shri Sandeep Kumar Khurana (“the Petitioner”).

Concerns

Whether retrospectively, GST Registration could be cancelled from the issuance date of the Show Cause Notice?

Hon’ble Delhi High Court’s Ruling

The Hon’ble Delhi High Court in ­­­­­­­­­­W.P. (C) No. 15670 of 2023 ruled as under:

• It was observed that the Petitioner is not adversely affected by the cancellation of GST registration, given the closure of the business. However, the Petitioner contests the retrospective effect of the cancellation, specifically from the date the registration was initially granted.
• The ruling stipulates that the Challenged Order, which revokes the registration, will be effective from May 18, 2020, the date of the Show Cause Notice (SCN). It further clarifies that the Challenged Order does not prevent the Respondents from pursuing actions to recover any outstanding taxes or addressing any statutory violations, should they exist, following the law. Consequently, the writ petition has been disposed of.