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of <h1>Retrospective GST registration cancellation invalid when show-cause notice lacked retrospective allegation; appeal remitted for fresh decision by Jan 15, 2026</h1> <h3>Ram Ashish Versus The Union of India & Ors.</h3> HC held that retrospective cancellation of GST registration is impermissible where the show-cause notice did not allege retrospective cancellation; ... Retrospective cancellation of GST Registration of the Petitioner - SCN did not allege retrospective cancellation of GST registration - HELD THAT:- The settled legal position is that if the SCN did not contemplate retrospective cancellation, the order cannot retrospectively cancel the registration of the Petitioner. This is clear from the decision of this Court in Akash Bansal [2025 (8) TMI 986 - DELHI HIGH COURT]. However, since the Petitioner has filed an appeal, let the appeal be decided by the concerned Appellate Authority bearing in mind the above settled precedents. An order shall be passed by the concerned Appellate Authority by 15th January, 2026. Petition disposed off. 1. ISSUES PRESENTED AND CONSIDERED 1.1 Whether a GST registration may be cancelled with retrospective effect where the Show Cause Notice (SCN) did not put the taxpayer on notice that retrospective cancellation was contemplated. 1.2 What are the requisite reasons, objective satisfaction and procedural safeguards (including opportunity of hearing) required before a proper officer exercises the power to cancel GST registration retrospectively under Section 29(2) and Rule 21. 1.3 Whether an appellate authority must decide a pending appeal within a specified time and afford personal hearing and portal access to enable effective exercise of appeal rights where retrospective cancellation has been ordered. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Whether a GST registration may be cancelled retrospectively where the SCN did not contemplate retrospective cancellation. Legal framework: Section 29(2) confers on the proper officer power to cancel GST registration 'from such date including any retrospective date' if circumstances in sub-section (2) are satisfied; Rule 21 sets out grounds and procedure for cancellation. Precedent Treatment (followed): The Court relies on an established line of prior decisions of this Court and comparable authorities which hold that retrospective cancellation cannot be mechanically or routinely applied and that the SCN must put the registrant on notice if retrospective cancellation is proposed. Interpretation and reasoning: The statutory power to cancel retrospectively is discretionary and must be exercised with objective satisfaction and demonstrable reasons. When an SCN fails to state that retrospective cancellation is being considered, the taxpayer is deprived of the opportunity to meet that specific consequence; therefore, an order effecting retrospective cancellation cannot be sustained. The Court emphasizes that retrospective cancellation has deleterious consequences (for example, denial of input tax credit to recipients) and thus requires explicit, reasoned invocation. Ratio vs. Obiter: Ratio - An order cancelling registration retrospectively is invalid where the SCN did not notify the taxpayer of the intention to cancel from a retrospective date and where the cancellation order lacks reasons demonstrating objective satisfaction for retrospective effect. Obiter - Observations on the broad policy consequences (e.g., denial of ITC to customers) serve as contextual justification but are not the sole basis of the holding. Conclusions: The Court holds that retrospective cancellation is impermissible unless the SCN contemplates such effect and the cancellation order contains demonstrable reasons justifying retrospective operation. Where the SCN did not so contemplate, cancellation must be made effective, if at all, from the date of the SCN or another non-retrospective date as justified by the record. Issue 2: The nature and quality of reasons and objective satisfaction necessary to sustain retrospective cancellation; and the requirement of fair hearing. Legal framework: Section 29(2) permits retrospective cancellation where circumstances set out in sub-section (2) are satisfied; principles of natural justice and the statutory scheme require reasoned orders and opportunity to be heard, including particulars in the SCN and date/time for personal hearing where applicable. Precedent Treatment (followed/distinguished): The Court follows prior jurisprudence that insists on reasoned satisfaction by the proper officer before invoking retrospective cancellation and that these powers cannot be exercised subjectively or mechanically. Prior decisions invalidating orders that either lacked reasons or were inconsistent with the SCN are applied. Interpretation and reasoning: The cancellation order must 'reflect the reasons which may have weighed upon the respondents' to justify retrospective cancellation. Mere power does not validate its invocation; the satisfaction must be based on objective criteria. Further, issuing an SCN without specifying retrospective cancellation or failing to afford an opportunity to contest retrospective effect breaches natural justice. Contradictory orders (e.g., stating no dues while imposing retroactive cancellation) undermine the reasoned exercise of power. Ratio vs. Obiter: Ratio - Proper exercise of retrospective cancellation power requires (a) explicit notice in the SCN that retrospective cancellation is proposed, (b) objective, demonstrable reasons in the cancellation order explaining retrospective effect, and (c) observance of fair hearing rights. Obiter - Discussion of ancillary consequences (e.g., how customers' ITC might be affected) elucidates considerations but is ancillary to the holding. Conclusions: The Court concludes that absence of rudimentary reasons for retrospective cancellation and failure to afford proper hearing renders a retroactive cancellation unsustainable. Consequently, where these defects exist, the appropriate remedy is to limit cancellation to the date of the SCN (or another appropriate prospective date) and remit contested factual or legal issues for adjudication if the authority intends to seek true retrospective effect with proper procedure. Issue 3: Duty of appellate authority and interim operational relief - disposal of appeals, personal hearing and portal access. Legal framework: The statutory appeal mechanism provides a right of appeal against cancellation orders; principles of natural justice and administrative fairness require timely adjudication and reasonable facilitation for prosecuting appeals (e.g., access to the GST portal, opportunity for personal hearing). Precedent Treatment (followed): The Court applies the principle that appellate authorities must decide appeals within a reasonable and prescribed timeframe and ensure appellants are given effective opportunity to present their case, consistent with prior administrative law holdings endorsing prompt disposal and hearing rights. Interpretation and reasoning: Given the significant business prejudice that follows from cancellation (especially if made retrospective), procedural fairness requires that the appeal be decided within a specified timeframe and that the appellant be provided necessary access and a personal hearing to file documents and present arguments. Where an appeal is pending, the appellate authority should proceed mindful of constraints on retrospective cancellation articulated above. Ratio vs. Obiter: Ratio - Pending appeals against cancellation must be adjudicated expeditiously; the appellate authority must afford a personal hearing and ensure the appellant has portal access to pursue the appeal. Obiter - Specifying precise timelines is administrative guidance tailored to the facts; the general principle is timely and effective adjudication. Conclusions: The Court directs that the pending appeal be decided within a fixed period, that a personal hearing be granted (with notice by email and mobile where provided), and that portal access be made available promptly to enable effective exercise of appellate rights. The departmental authority remains free to reassess or pursue retrospective cancellation only after complying with required procedural and substantive standards.
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