Order Cancelling GST Registration With Retrospective Effect Bereft Of Reasons, Liable To Be Quashed: Delhi High Court

The Delhi High Court has quashed the order cancelling GST registration with retrospective effect, bereft of reasons.

The bench of Justice Sanjeev Sachdeva and Justice Ravinder Dudeja has observed that one of the consequences of cancelling a taxpayer's registration with retrospective effect is that the taxpayer's customers are denied the input tax credit availed in respect of the supplies made by the taxpayer during such a period.

The petitioner/assessee has challenged the show cause for cancellation dated April 18, 2022, and the orders of rejection and applications for revocation of cancellation dated August 30, 2023.

The assessee submitted that the show cause notice issued under Section 29 of the Goods and Services Tax Act, 2017 was itself defective as it did not give any details of the alleged wrongful availment or utilisation of input tax credit.

The assessee contended that the show cause notice dated April 18, 2022, did not give any details; however, it mentions that the details were enclosed and that what was enclosed with the show cause notice was a mere photograph of an unknown individual. The revocation applications were filed, which were rejected by the order without any reason. The reply of the petitioner has been examined, but the same has not been found to be satisfactory for the reason that “the reason entered for revocation of cancellation is not appropriate.”.

The assessee contended that there is nothing available on record either in the show cause notice or the orders as to the alleged wrongful availment or utilization of input tax credit. On this ground alone, the show cause notice as well as the application seeking revocation are not sustainable.

The court noted that there was no material on record to show why the registration was sought to be cancelled retrospectively. There is no material to show that there was any wrongful availment or utilization of input tax credit effective from the date of registration until the issuance of the show cause notice.

Counsel For Petitioner: R. P. Singh

Counsel For Respondent: Rajeev Aggarwal

Case Title: RS Wires Industries Versus Sales Tax Officer Class

Citation: 2024 LiveLaw (Del) 18

Case No.: W.P.(C) 16189/2023 & CM APPL. 65071/2023

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