Bhagvan Singh Vs Commissioner of DGST & Anr (Delhi High Court)
The writ petition challenged an order dated 12.10.2023 passed by the Sales Tax Officer Class II/AVATO Ward 29, whereby the petitioner’s GST registration was cancelled retrospectively with effect from 04.10.2018. The petitioner is engaged in the business of retail and wholesale trading of garments and fabrics.
A Show Cause Notice (SCN) dated 15.01.2023 was issued proposing cancellation of GST registration on the ground of non-furnishing of returns for a continuous period of six months. The notice required the petitioner to file a reply within 30 days from the date of service and to appear for a personal hearing on 13.02.2023 at 11:00 am. The SCN also stated that the petitioner’s registration stood suspended with effect from 15.01.2023.
The Court examined the scope of retrospective cancellation of GST registration under Section 29(2) of the Central Goods and Services Tax Act, 2017. While acknowledging that the statute permits retrospective cancellation, the Court emphasised that the authority exercising such power is required to record reasons justifying the retrospective effect. The recording of reasons is not discretionary but a mandatory responsibility reflecting application of mind.
The Court noted that several coordinate benches of the Delhi High Court have consistently held that an order cancelling GST registration retrospectively must contain clear reasons supporting such action. Further, these decisions also extend the obligation to the SCN itself, which must explicitly indicate the department’s intention to cancel the registration retrospectively, thereby enabling the assessee to object and respond to that specific proposal.
