GST registration cancellation overturned after revenue improperly rejected revocation application citing procedural defects

Delhi HC allowed petition challenging rejection of GST registration revocation application. Petitioner's registration was cancelled due to discrepancies during physical verification, including undisclosed business address change and missing HSN codes on CBIC portal. Revenue rejected revocation citing one-day delay without proper limitation law citation and non-reflection of new business premises. Court held application was timely filed within 30-day limitation period, tax return discrepancies cannot justify registration cancellation, and authorities must follow proper assessment procedures. Petitioner's explanation regarding VAT migration and inability to take corrective measures was accepted. Impugned orders set aside.

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Issues:
The judgment involves the cancellation and revocation of GST registration, discrepancies in tax returns, and the proper procedure to be followed in such cases.

Cancellation of GST Registration:
The petitioner challenged the cancellation of their GST registration, which was done based on a Show Cause Notice citing discrepancies noticed during physical verification. The petitioner's response to the notice was deemed unsatisfactory, leading to the cancellation of registration. However, the court found that the notice lacked specific reasons, and the cancellation order was not reasoned, hence unsustainable.

Revocation of GST Registration:
The petitioner applied for revocation of the cancellation, citing a delayed application due to the cancellation status preventing form submission for address change. The authorities rejected the revocation citing reasons like delay in application, discrepancies in tax returns, unreported address change, and missing details in registration. The Appellate Authority upheld the rejection, emphasizing the delay in filing the revocation application and discrepancies in tax returns.

Procedural Compliance and Restoration of Registration:
The court noted that the petitioner's explanation for the delay in revocation was valid as it was within the limitation period. The main ground for not restoring the registration was the unreported address change, which the petitioner claimed was due to the cancellation preventing form submission. The court held that this cannot be a valid ground for non-restoration. Additionally, discrepancies in tax returns should not lead to cancellation without proper assessment procedures. The petitioner's claims of disclosing bank details and goods classification were not accepted, but the court found that the authorities should have communicated the discrepancies during the active registration period for correction.

Judgment and Direction:
The court allowed the petition, setting aside the impugned orders and directed the restoration of the petitioner's GST registration. It clarified that the authorities could take lawful steps if necessary, with the petitioner retaining the right to contest. The petition was disposed of accordingly, along with any pending applications.

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