2024 (9) TMI 1294 - HC - GST

GST Registration Cancellation Overturned: Procedural Errors Invalidate Original Order, Ensuring Fair Hearing for Petitioner

M/s. Balaji Industries (Vipin Kumar) Versus The Principal Commissioner CGST Delhi North Commissionerate & Anr.

HC ruled on GST registration cancellation, finding procedural irregularities in the original order. The court modified the cancellation date to ... Cancellation of petitioner’s GST registration with retrospective effect - seeking modification in the order to the limited extent that the same be made operative from March, 2022 - violation of principles of natural justice - HELD THAT:- The reason for which the petitioner’s GST registration was cancelled was not reflected in the SCN. Although, the petitioner claims that it did not receive the SCN, it is apparent that even if it had, the same provided it no opportunity to respond to the reasons as set out in the impugned order cancelling its GST registration. The petitioner is not aggrieved by the cancellation of its GST registration as it had closed down its business. The petitioner is, essentially, aggrieved by cancelling of its GST registration with retrospective effect. The present petition is disposed of with the direction that the petitioner’s GST registration stands cancelled with effect from 24.05.2022 (being the date on which it was suspended) and not with retrospective effect from 11.09.2017. Issues:1. Modification of GST registration cancellation order2. Non-compliance with GST Act and Rules3. Lack of opportunity to respond to cancellation reasons4. Appeal rejection on limitation ground5. Cancellation of GST registration with retrospective effectAnalysis:The petitioner sought modification of the order cancelling its GST registration with retrospective effect. The petitioner had stopped business operations in March 2022 and had requested cancellation of GST registration through its Chartered Accountant. However, a Show Cause Notice (SCN) was issued on 24.05.2022, citing non-compliance with GST Act provisions as the reason for cancellation. The petitioner's registration was suspended from the date of the SCN, and subsequently cancelled due to failure to respond to the SCN. The reasons for cancellation in the impugned order differed from those in the SCN, and the petitioner's appeal against the cancellation was rejected on the ground of being time-barred.The Court noted that the petitioner was not contesting the cancellation itself but objected to the retrospective effect of the cancellation. The Court found that the petitioner was not given a fair opportunity to respond to the reasons stated in the impugned order, which were different from those in the SCN. The respondents, during the proceedings, agreed to make the cancellation of GST registration effective from the date of the SCN, i.e., 24.05.2022, instead of the original retrospective date.Consequently, the Court disposed of the petition by directing the cancellation of GST registration from 24.05.2022, clarifying that the modification applied only to the retrospective aspect. The order emphasized that the modification did not prevent the respondents from taking further legal action for statutory violations or dues recovery in accordance with the law.Overall, the judgment addressed the procedural irregularities in the cancellation of GST registration, ensuring that the petitioner's rights were upheld by modifying the order to prevent retrospective effects and by allowing the respondents to pursue legal actions within the bounds of the law.