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GST Registration Cancellation Now Effective from SCN Date, Not Retrospective; Court Upholds Natural Justice Principles. The HC modified the order for the cancellation of the petitioner's GST registration, initially set to be retrospective from 01.07.2017, to take effect ...
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GST Registration Cancellation Now Effective from SCN Date, Not Retrospective; Court Upholds Natural Justice Principles.
The HC modified the order for the cancellation of the petitioner's GST registration, initially set to be retrospective from 01.07.2017, to take effect from the date of the SCN, 13.11.2023. The Court found the retrospective cancellation unjustified, lacking proper reasoning, and violating principles of natural justice. The respondent may pursue lawful actions for any statutory violations by the petitioner. The petition was disposed of, and all pending applications were resolved.
Issues: Impugning Show Cause Notice for GST registration cancellation and retrospective cancellation of GST registration.
Analysis: The petitioner challenged a Show Cause Notice (SCN) dated 13.11.2023 and an order dated 05.02.2024 for the retrospective cancellation of their GST registration from 01.07.2017. The SCN was issued due to the petitioner's failure to file returns for six months. The petitioner's registration was suspended from 13.11.2023. The petitioner did not respond to the SCN, leading to the cancellation of their registration. The impugned order cited "Others Rule 22 (1)/sub-rule (2A) of rule 21A" as the reason for cancellation.
The petitioner argued that the reasons in the impugned order were unclear and inapplicable. They contended that Rule 22(1) of the Central Goods and Services Tax Rules, 2017 (Rules) did not justify cancellation. Additionally, the reference to Rule 21A(2A) about discrepancies in returns was irrelevant as the SCN did not mention any such discrepancies. The petitioner stated they had filed a return in October 2019 but had ceased transactions since then.
The Court noted that cancellation with retrospective effect must be justified and not arbitrary. The decision to cancel retroactively lacked proper reasoning and violated principles of natural justice as the SCN did not propose retrospective action. Therefore, the Court modified the order, making it effective from the date of the SCN, i.e., 13.11.2023. The respondent was allowed to take lawful actions for any statutory violations by the petitioner. The petition was disposed of accordingly, and all pending applications were also resolved.
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