GST registration cancellation cannot be withheld merely because tax liability remains under assessment, Delhi HC clarifies

GST registration cancellation may not be deferred merely because the taxpayer's liability is still under assessment. The Delhi HC noted that cancellation after discontinuance of business should be processed promptly, and directed the proper officer to consider the application expeditiously. It also clarified that cancellation of registration does not extinguish liability to tax, interest, penalty, or other statutory consequences of non-compliance, so pending assessment was not a valid ground to withhold cancellation. Limited relief was therefore granted by requiring prompt administrative action while leaving fiscal liabilities unaffected.

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Issues: (i) Whether the proper officer should be directed to process the petitioner's application for cancellation of GST registration expeditiously. (ii) Whether cancellation of GST registration could be withheld on the ground that the petitioner's tax liability was yet to be assessed.

Issue (i): Whether the proper officer should be directed to process the petitioner's application for cancellation of GST registration expeditiously.

Analysis: The petitioner had applied for cancellation of GST registration after discontinuance of business and claimed compliance with the information sought by the notice issued in that regard. In these circumstances, the matter called for administrative processing of the application without delay.

Conclusion: The proper officer was directed to process the cancellation application as expeditiously as possible.

Issue (ii): Whether cancellation of GST registration could be withheld on the ground that the petitioner's tax liability was yet to be assessed.

Analysis: The cancellation of registration does not extinguish the liability to pay tax, interest or penalty, nor does it eliminate the consequences of statutory non-compliance. Accordingly, pending assessment of liability was not a valid basis to defer cancellation.

Conclusion: Cancellation of GST registration was not required to be withheld on account of any pending assessment of liability.

Final Conclusion: Limited relief was granted by directing prompt consideration of the cancellation application, while making it clear that the petitioner's fiscal liabilities and consequences of non-compliance would continue unaffected.

Ratio Decidendi: Cancellation of GST registration cannot be deferred merely because tax liability remains to be assessed, since such cancellation does not absolve the registrant from liability to tax, interest, penalty, or statutory consequences of non-compliance.

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