2024 (4) TMI 517 - HC - GST

GST Registration Cancellation Allowed Despite Pending Recovery Proceedings Under Section 29 of CGST Act

HC ruled in favor of petitioner's GST registration cancellation. The court determined that pending recovery proceedings (DRC-01) cannot obstruct ... Cancellation of the registration of petitioner - cancellation on the ground that the petitioner does not intend to carry on the business under the said GST number - HELD THAT:- The proceedings under DRC-01 are independent of the proceedings for cancellation of GST Registration and can continue despite cancellation of GST registration. The recovery of any amount found due can always be made irrespective of the status of the registration. Thus, merely pendency of the DRC-01 cannot be a ground to decline the request of the tax-payer for cancellation of the GST Registration. The GST Registration of the Petitioner shall be treated to be cancelled with effect from 01.02.2024 i.e., the date from which Petitioner seeks cancellation of GST registration. Petitioner shall make all the necessary compliances as required by Section 29 of the Central Goods and Services Tax Act, 2017 and it would be without prejudice to the proceedings initiated by the Respondents by issuance of DRC-01 for the financial year 2018-19 to financial year 2023-24 and the defence of the Petitioner thereto. Petition disposed off. Issues:The judgment deals with a petition seeking cancellation of GST registration and the opposition by the respondents based on Show Cause Notices issued to the petitioner.Cancellation of GST Registration:The petitioner had applied for cancellation of GST registration, which was initially rejected without considering the petitioner's response to a query. The petitioner reapplied for cancellation, stating the intention to cease business under the GST number. The court noted that the proceedings under DRC-01 for recovery of dues are separate from the cancellation process. The pendency of DRC-01 cannot be a reason to deny cancellation of GST registration. The court directed the cancellation of the petitioner's GST registration effective from the date requested by the petitioner, subject to compliance with necessary requirements under Section 29 of the Central Goods and Services Tax Act, 2017.Disposition and Further Action:The petition, along with the pending application, was disposed of with the directive for cancellation of GST registration. The respondents were allowed to take further action, including retrospective cancellation, provided they issue a proper Show Cause Notice and grant the petitioner an opportunity for a hearing.