Retrospective GST registration cancellation requires recorded reasons and notice; backdated cancellation was confined to the later effective date.

GST registration cancellation could not be sustained retrospectively from 01.07.2017 where the show cause notice did not propose retrospective effect, the cancellation order gave no reasons for such a drastic consequence, and the record indicated no tax due. Non-filing of returns for six months, by itself, was insufficient to justify backdated cancellation in the absence of recorded justification. The cancellation was therefore held unsustainable to that extent, and the effective date was confined to 31.12.2019.

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Issues: Whether cancellation of GST registration could be sustained with retrospective effect from 01.07.2017, and whether the effective date of cancellation ought to be confined to 31.12.2019.

Analysis: The cancellation order was founded only on the allegation of non-filing of returns for six months. The order did not record any reason for giving retrospective effect to the cancellation, and the accompanying tabular statement indicated that no tax was due. In the absence of any indication in the show cause notice that retrospective cancellation was proposed, and in the absence of reasons justifying such a drastic consequence, retrospective cancellation from 01.07.2017 could not be sustained.

Conclusion: The retrospective cancellation was unsustainable. The cancellation of GST registration was directed to take effect from 31.12.2019.

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