Case Law Details
Udayraj Yadav Vs Sales Tax Officer (Delhi High Court)
In a significant ruling, the Delhi High Court has directed the cancellation of GST registration of Udayraj Yadav, a wholesale trader, retroactively from the date of the Show Cause Notice (SCN). This judgment, passed on May 15, 2023, underscores the importance of procedural compliance and provides clarity on the retrospective cancellation of GST registrations. The case revolves around the non-continuation of business activities and alleged wrongful availment of Input Tax Credit (ITC).
The petitioner, Udayraj Yadav, held a GST registration for his wholesale and trading business. However, a Show Cause Notice (SCN) was issued on April 27, 2023, alleging that Yadav had issued invoices without actual supply of goods or services, leading to wrongful ITC claims. This SCN did not indicate the possibility of retrospective cancellation, thereby not providing Yadav an opportunity to contest this aspect.
On May 15, 2023, the GST registration was cancelled retrospectively from July 1, 2017. The cancellation order lacked detailed reasoning and only cited non-reply to the SCN and violation of Rule 21(b) as grounds. Yadav’s subsequent application for revocation of the cancellation was also rejected based on availing ITC from dubious entities without substantial details.
Yadav contended that his business was no longer operational and all necessary GST returns had been filed up to March 2023. The court observed that both the SCN and the cancellation order were devoid of specifics regarding the alleged wrongful ITC claims. It emphasized that retrospective cancellation under Section 29(2) of the GST Act should be based on objective criteria and not applied mechanically.
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