Delhi HC: Penalty for Late GSTRs Cannot be Imposed While Processing of GSTIN Cancellation

The Delhi High Court has recently made a ruling. The case is related to the Goods and Services Tax (GST). The Delhi High court bench is headed by Justices Vibhu Bakhru and Amit Mahajan. That a person is not obligated to pay any penalty when their GSTIN registration was cancelled. And this started from the day applicant applied for the revocation of cancellation.

The case in question involved Ishwar Chand. He is the proprietor of M/s Bhagwati Trading Co. He had not filed his GST returns for over six months. Authorities noticed that and send him a Show Cause Notice with a penalty of 2,32,014. The petitioner filed a petition requesting the cancellation of the penalty.

The respondent’s counsel argued that the petitioner had calculated the penalty figure himself. Because they never made any demand regarding penalty in the notice. However, the petitioner claimed that the respondent had issued a Show Cause Notice proposing to reject the application for revocation of the cancellation of GSTIN registration. on the grounds that it lacked a proper reason for revocation.

The high court further found that rejecting the application for GSTIN registration on the basis of the petitioner’s failure to file his GST returns is wrong. as it did not provide a proper reason for rejection.

The ruling ensures that they cannot be penalized for not filing their returns as long as they have applied for revocation of the cancellation. Because registration was cancelled and he was not able to pay the Taxes. This ruling is significant because it provides relief to taxpayers who are unable to file their GST returns due to the cancellation of their registration.