GST Registration Cancellation Overturned: Procedural Errors Invalidate Original Order, Revised Date Established for Tax Compliance

HC ruled on GST registration cancellation, finding procedural defects in the original order. The court modified the retrospective cancellation date to align with the Show Cause Notice date. Respondents were permitted to pursue tax recovery and registration cancellation through proper legal procedures, ensuring compliance with Section 29 of the Central Goods and Services Tax Act, 2017.

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Issues Involved: Impugning orders of dismissal on limitation grounds, retrospective cancellation of GST registration, lack of reasons provided in Show Cause Notice and order, compliance with Section 29 of the Central Goods and Services Tax Act, 2017.

In the present case, the Petitioner challenged an order dismissing their appeal based on limitation grounds and another order retrospectively canceling their GST registration. The Show Cause Notice lacked specific reasons and failed to mention the date for the Petitioner's appearance. The subsequent order for cancellation did not provide clear reasons and contradicted itself regarding the Petitioner's response. The order also lacked justification for the retrospective cancellation of registration, with no explanation provided for the effective date chosen.

The Court noted that both the Show Cause Notice and the order for cancellation were deficient in details and failed to specify reasons for the retrospective cancellation. The Court highlighted that registration cannot be cancelled with a retrospective effect mechanically, emphasizing that such decisions must be based on objective criteria rather than subjective judgment. The Court also pointed out that the consequences of retrospective cancellation, such as denying input tax credit to the taxpayer's customers, should be considered before making such a decision.

Considering that the Petitioner had ceased business activities and no longer wished to continue with the registration, the Court modified the impugned order to reflect the cancellation with effect from the date of the Show Cause Notice. The Petitioner was directed to comply with the requirements of Section 29 of the Central Goods and Services Tax Act, 2017. The Respondents were allowed to take steps for recovery of any due tax, penalty, or interest, including retrospective cancellation of GST registration following proper procedures and natural justice.

In conclusion, the petition was disposed of with the modification of the cancellation date and the clarification regarding further actions by the Respondents in accordance with the law.

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