Applicant Surrendered GST Registration Due to Business Loss, Delhi HC Revises GSTIN Cancellation Order

The Delhi High Court revised the GST Cancellation order to the limited extent that registration will now be deemed as cancelled wef 01.10.2019 i.e., the date when the applicant applied for GST registration cancellation. The applicant surrendered the GST Registration due to a loss in business.

The applicant M/s Veetrag Traders contested the order in which the petition of the applicant asking for the restoration of the GST registration has been dismissed on the basis that it is barred via limitation. The applicant impugned the order dated in which the GST registration of the applicant was cancelled w.e.f. 01.07.2017 and also impugned a Show Cause Notice (SCN) dated 13.08.2020.

Vide SCN applicant asked to show cause as to why the registration should not be cancelled for the below-stated reason- “Any Taxpayer excluding other composition taxpayer has not filed returns for a continuous period of six months”

The applicant is a trading firm in the business of selling craft paper and possesses GST registration. The applicant had given an application asking for the GST registration cancellation dated 01.10.2019 based on the closure of business.

As per the application, notice was furnished before the applicant dated 11.04.2020 asking for the other data and documents associated with the application for cancellation of registration. As per the unsatisfactory reply, an order on 16.06.2020 was passed rejecting the application for cancellation merely stating “Application rejected by the provisions of the Act”.

SCN was issued before the applicant. The notice does not mention any clear cause it only specifies “Any Taxpayer other than composition taxpayer has not filed returns for a continuous period of six months”. SCN does not position the applicant to the notice that the registration is obligated to be cancelled retrospectively. The applicant does not have any chance to even object to the retrospective cancellation of the registration.

Read Also: Delhi HC: GSTIN Can’t be Cancelled If Not Filed GST Returns for Some Timeframe

The applicant’s counsel said that because of the loss in business, the applicant has closed all the operations of the business and seeks his consultant to surrender the said GST registration. He said that the applicant had obtained a notice asking for the other data and documents pertinent to the application for the registration cancellation, but because of the Covid-19 pandemic, the applicant missed the notice and his consultant.

The applicant was not aware of the legal proceedings since the applicant consultant lapsed as of the pandemic and therefore, he was unable to file a reply or his GST return because of lower learning about the process of GST.

Justice Sanjeev Sachdeva And Justice Ravinder Dudeja believed that the SCN as well as the impugned order are also empty of any details. Therefore it cannot be sustained and neither the Show Cause Notice nor the order spells out the reasons for retrospective cancellation.

The impugned order is been altered by the court to the fixed extent that registration will now be deemed as cancelled wef 01.10.2019 i.e., the date when the applicant applied for cancellation of GST registration. The applicant will make the critical compliances as mandated by Section 29 of the Central Goods and Services Tax Act, 2017.