Manufacturer's GST Registration Cancellation Modified: Retrospective Order Limited to Show Cause Notice Date

HC reviewed GST registration cancellation for a manufacturing firm. The court modified the retrospective cancellation order, limiting its effect from the show cause notice date (12.05.2022) instead of the originally proposed date (23.08.2017). While rejecting the firm's revocation application as time-barred, the HC permitted authorities to pursue statutory compliance proceedings and recover any outstanding dues.

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Issues:
1. Cancellation of GST registration with retrospective effect.
2. Compliance with statutory provisions under the GST Act.
3. Proper officer's authority to cancel registration.
4. Lack of reasons for cancellation in the impugned order.
5. Petitioner's failure to respond to show cause notice and personal hearing.
6. Petitioner's application for revocation of the impugned order.
7. Rejection of petitioner's appeal as time-barred.

Analysis:

The petitioner, a partnership firm engaged in manufacturing, challenged the cancellation of its Goods and Services Tax (GST) registration with retrospective effect from 23.08.2017. The cancellation was based on non-compliance with unspecified provisions of the GST Act. The petitioner cited adverse circumstances due to COVID-19 for closure in April 2022, claiming prior tax payments. The show cause notice (SCN) issued on 12.05.2022 led to suspension and subsequent cancellation of registration, with no specific reasons provided for the retrospective effect.

The High Court noted that the SCN lacked specific grounds for cancellation with retrospective effect and emphasized that such decisions must be reasoned and not arbitrary. As the impugned order failed to provide reasons supporting the retrospective cancellation, the court modified it to be effective from the date of the SCN, i.e., 12.05.2022, instead of 23.08.2017. The court clarified that fresh proceedings could be initiated if grounds for retrospective cancellation exist.

The petitioner's application for revocation of the cancellation was rejected due to failure to respond within the stipulated period. Subsequently, the appeal against this rejection was dismissed as time-barred on 30.11.2023. The court highlighted that the petitioner's grievance was not the cancellation itself but the retrospective aspect covering a period of claimed compliance. The judgment concluded by allowing the authorities to pursue statutory non-compliance or dues recovery proceedings and disposed of the petition accordingly, including pending applications.

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