The Delhi High Court observed that merely because a taxpayer has not filed the returns for some period, it does not mean that the taxpayer’s GST registration is required to be cancelled with retrospective date also covering the period when the returns were filed and the taxpayer was compliant.

The bench of Justice Sanjeev Sachdeva and Justice Ravinder Dudeja observed, “In terms of Section 29(2) of the Central Goods and Services Tax Act, 2017, the proper officer may cancel the GST registration of a person from such date including any retrospective date, as he may deem fit if the circumstances set out in the said sub-section are satisfied. The registration cannot be cancelled with retrospective effect mechanically. It can be cancelled only if the proper officer deems it fit to do so. Such satisfaction cannot be subjective but must be based on some objective criteria.”

In the present case, Petitioner challenged the order which cancelled the GST registration of the Petitioner retrospectively.

The Petitioner, who is engaged in the business of polishes, baby garments etc had submitted an application seeking cancellation of GST registration. A show cause notice seeking a stock statement and sale-purchase summary was issued in 2020 with no opportunity for a personal hearing, after which provisional registration of the petitioner was suspended.

Later, another show cause notice which was issued in 2021 did not bring the petitioner to notice that the registration was liable to be cancelled retrospectively. Hence, the Petitioner had no opportunity to even object to the retrospective cancellation of the registration.

Advocate R.P. Singh appeared for the Petitioner and Advocate Shaguftha Hameed appeared for the Respondent.

The High Court found the order contradictory. It further noted that the effective date of cancellation of registration was retrospective; however, as according to Court, there was no material on record to show as to why the registration sought to be cancelled retrospectively.

The Court observed, Neither the show cause notice nor the order spell out the reasons for cancellation. In fact, in our view, order dated 29.01.2021 does not qualify as an order of cancellation of registration.”

The Court further noted that both the Petitioners and the department want cancellation of the GST registration of the Petitioner, though for a different reason.

Consequently, the High Court modified the impugned order to a limited extent that registration was cancelled from the date when the Petitioner had applied for cancellation of GST registration.

Cause Title: M/s M K Traders v. Sales Tax Officer (Neutral Citation: 2024: DHC: 1811-DB)


Appellant: Adv. R.P. Singh, Adv. Priyank Goel

Respondent: Adv. Shaguftha Hameed, Adv. Prateek Badhwar, Adv. Samridhi Vats

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