Delhi HC Revises Retrospective GSTIN Cancellation Due to Lack of Reasoning for Late GST Returns

The retrospective cancellation of GST registration has been amended by the Delhi High Court on failure to file the timely returns mentioning an absence of reasoning in the impugned order.

The applicant, M/S Feron Life Sciences Pvt. Ltd., a company in trading medicaments, centrifuges, and allied products, was registered under the Central Goods and Services Tax Act, 2017 (CGST Act).

The applicant contested the Show Cause Notice (SCN) on 09.03.2021, and the subsequent order on 28.12.2021, which retrospectively cancelled the GST registration of the company from 02.07.2017.

Mainly the applicant challenged the retrospective cancellation of its GST registration. They do not contend the cancelation itself however asked for the amendment to ensure that it was not applied.

The applicant’s representative Vineet Bhatia, contended that the impugned SCN and the order were inadequate as the Show cause notice (SCN) does not mention a date and time for the personal hearing therefore refusing the applicant a fair chance to illustrate the matter.

Also, the Show Cause notice does not ask to cancel the registration retrospectively however just based on the failure of the applicant to file the returns within time. The impugned order was unable to furnish any reasoning for the retrospective cancellation just directing the show cause notice.

It was taken into account by the representative of the respondent Rajeev Aggarwal, that the impugned order can be incurred operative from the SCN date i.e 09.03.2021, since the GST registration of the applicant was suspended from that date.

Numerous procedural lapses in the cancellation procedure were encountered via the bench of Justices Vibhu Bakhru and Sachin Datta remarking that Show cause notice does not have a mentioned date and time for a personal hearing and no cause was furnished in the impugned order towards retrospective cancellation.

As the related applicant’s counsel does not push the relief to set aside the imputed SCN or the impugned order in their entirety, we take into account to dispose of the same petition via referring that the applicant GST registration cancellation would be wef the date of the impugned SCN – 09.03.2021 – and not retrospectively wef 02.07.2017 as set out in the impugned order. Mentioned via the court.

The petition was disposed of altering the effective date of cancellation to 09.03.2021 and assuring that compliance with the procedural needs under the CGST act. The order mentioned that the same shall not prevent the respondent from starting additional steps for any failure within the applicant to adhere to the legal provisions.