HC rules GST registration cancellation cannot be applied retrospectively from 01.07.2017 without proper inquiry

The HC allowed the petition challenging the retrospective cancellation of the petitioner's GST registration from 01.07.2017. The court found the cancellation order unreasoned, as the show cause notice did not mention retrospective cancellation or any inquiry confirming non-existence at the declared business address. The petitioner had applied for cancellation on 20.11.2020, stating cessation of business. Therefore, the HC directed that the cancellation be effective only from 20.11.2020, not retrospectively.

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Issues involved:
The petition impugning an order of the Delhi GST Appellate Authority rejecting the petitioner's appeal against the cancellation of GST Registration. The petitioner also challenges the retrospective cancellation of GST Registration and seeks rectification of the cancellation date.

Details of the Judgment:

1. The petitioner, aged about 74 years, engaged in the business of manufacturing and trading in copper wires, sought cancellation of GST Registration due to health issues. The registration was cancelled from a retrospective date, prompting the petitioner to file an appeal.

2. The petitioner's application for cancellation was rejected on the grounds of unsatisfactory reply, despite the petitioner not submitting any reply. The order of rejection lacked reasons and was deemed erroneous as the petitioner did not file any response.

3. Medical documents were produced by the petitioner to demonstrate health issues, including a diagnosis of "carcinoma left buccal mucosa" and surgery in February 2021. Subsequently, a show cause notice was issued proposing cancellation due to non-functioning at the principal place of business.

4. The GST Registration was cancelled with retrospective effect from 01.07.2017, leading to the petitioner's appeal being rejected on the basis of being filed beyond the prescribed period. The petitioner argued that the cancellation should be effective from the date of ceasing business, i.e., 20.11.2020.

5. The Court allowed the petition, directing the effective cancellation of GST Registration from 20.11.2020. However, authorities are not precluded from recovering dues or cancelling registration retrospectively if it's proven that the petitioner did not conduct any business post-registration, subject to proper show cause notice and hearing opportunity.

This judgment highlights the importance of procedural fairness and proper reasoning in administrative decisions, ensuring that cancellations of registrations are based on valid grounds and supported by evidence, especially in cases involving health issues and cessation of business activities.

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