Case Law Details
Salasar Trading Company Vs Principal Commissioner of Goods And Service Tax (Delhi High Court)
Introduction: In a landmark judgment, the Delhi High Court has set a significant precedent concerning the cancellation of Goods and Services Tax (GST) registration. In the case of Salasar Trading Company vs. Principal Commissioner of Goods And Service Tax, the Court highlighted the necessity for a proper officer to achieve objective satisfaction before proceeding with the retrospective cancellation of GST registration. This article delves into the details of the case, the court’s judgment, and its implications on the GST regime.
Detailed Analysis: The case centers on Salasar Trading Company, whose GST registration was cancelled retrospectively effective from May 28, 2022, following a Show Cause Notice issued on July 18, 2023. The notice alleged fraud, wilful misstatement, or suppression of facts under Section 29(2)(e) of the Central Goods and Services Tax Act, 2017. However, the notice and subsequent cancellation order were found lacking in specificity, not providing the petitioner with a reasonable opportunity to contest the retrospective cancellation or adequately detailing the reasons for such action.
The petitioner, represented by learned counsel, contended that the lack of detailed reasoning and the absence of an opportunity to address the retrospective nature of the cancellation were unjust. Furthermore, the petitioner’s plea for condonation of delay in seeking revocation of the cancellation, attributing the delay to health issues and miscommunication by their tax consultant, highlighted procedural shortcomings in the cancellation process.
The Delhi High Court, upon reviewing the merits of the case, underscored that the GST registration cancellation, particularly with retrospective effect, cannot be mechanistic. It necessitates objective satisfaction based on tangible criteria, rather than subjective discretion. The court pointed out that such cancellation has significant ramifications, including the denial of input tax credit to the taxpayer’s customers for the period in question, mandating careful consideration of the broader consequences.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
Author Bio
