Archit Khandelwal Vs Pr. Commissioner of DGST Delhi (Delhi High Court)
The case of Archit Khandelwal vs Pr. Commissioner of DGST Delhi revolves around the retrospective cancellation of GST registration due to the discontinuation of business.
The petitioner in this case, engaged in the business of trading in metals, sought cancellation of their GST registration citing the closure of business. Despite the submission of a cancellation application, subsequent show cause notices, and responses, the registration was retrospectively cancelled by an order dated 16.06.2021.
The petitioner contested the retrospective cancellation, emphasizing the lack of opportunity to object and the absence of specific reasons provided for such action. The High Court observed that the cancellation lacked detailed reasoning and failed to adhere to the principles outlined in Section 29(2) of the Central Goods and Services Tax Act, 2017.
The court highlighted that the cancellation with retrospective effect could have adverse implications, particularly concerning the denial of input tax credit to the taxpayer’s customers. It emphasized the necessity for objective criteria and justified grounds for such cancellations, rather than mechanical actions.
Both the petitioner and the department expressed intent for cancellation, albeit for different reasons. Considering the petitioner’s discontinuation of business, the court modified the cancellation date to 31.12.2019, aligning with the cessation of business activities. The judgment outlined the petitioner’s obligations under Section 29 and allowed the respondents to pursue recovery measures in accordance with the law.
