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of <h1>GST Registration Cancellation Overturned: Procedural Flaws Invalidate Retrospective Order, Ensures Fair Tax Recovery Process</h1> <h3>CHIMA RAM HARNAND RAI Versus PRINCIPAL COMMISSIONER DEPARTMENT OF TRADE AND TAXES GOVERNMENT OF NCT OF DELHI AND ANR</h3> CHIMA RAM HARNAND RAI Versus PRINCIPAL COMMISSIONER DEPARTMENT OF TRADE AND TAXES GOVERNMENT OF NCT OF DELHI AND ANR - 2024 (87) G. S. T. L. 170 (Del.) Issues involved:The judgment involves the issues of appeal dismissal on the ground of limitation, retrospective cancellation of GST registration, issuance of Show Cause Notice, lack of specific reasons for rejection, and the requirement for proper procedures and objective criteria in cancellation of registration.Appeal Dismissal on Ground of Limitation:The petitioner challenged the order dismissing their appeal solely on the ground of being time-barred. The High Court issued notice and proceeded with final disposal with the consent of both parties. The petitioner, engaged in the business of plastic raw material, had sought cancellation of GST Registration due to health reasons, which was initially rejected without specific reasons provided.Retrospective Cancellation of GST Registration:The petitioner's GST registration was cancelled retrospectively, with the Show Cause Notice citing failure to furnish returns for a continuous period of six months. The notice and subsequent order lacked specific reasons for cancellation, and the petitioner was not given the opportunity to object to the retrospective cancellation. The High Court emphasized that registration cannot be cancelled with retrospective effect mechanically and must be based on objective criteria.Lack of Specific Reasons for Rejection and Cancellation:Both the Show Cause Notice and the impugned order lacked details and reasons for the retrospective cancellation of registration. The order was contradictory, stating no reply was submitted while referencing a reply in response to the notice. The High Court noted the absence of reasons for retrospective cancellation and the lack of opportunity for the petitioner to object.Procedures and Objective Criteria in Cancellation of Registration:The judgment highlighted the importance of proper procedures and objective criteria in cancelling GST registration. The High Court emphasized that cancellation with retrospective effect should only occur when warranted by specific consequences and objective criteria. Both parties desired the cancellation of registration, albeit for different reasons.Conclusion:The High Court modified the impugned order to cancel the registration from the date the petitioner filed the application for cancellation. The petitioner was directed to comply with the necessary requirements under Section 29 of the Central Goods and Services Tax Act, 2017. The judgment clarified that respondents could take steps for recovery of tax, penalty, or interest in accordance with the law, including retrospective cancellation after providing a proper show cause notice and an opportunity for hearing.
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