GST registration cannot be cancelled with retrospective effect mechanically: Delhi HC

By CA Sandeep Kanoi Goods and Services Tax Judiciary February 4, 2025

TaxGuru Citation: 2025 taxguru.in 869
Case Name: Riddhi Siddhi Enterprises Vs Commissioner of Goods And Services Tax (CGST) (Delhi High Court)
Appeal Number: Only available for paid members
Date of Judgement/Order: Only available for paid members
Courts: All High Courts, Delhi High Court

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Riddhi Siddhi Enterprises Vs Commissioner of Goods And Services Tax (CGST) (Delhi High Court)

Delhi High Court reviewed the writ petition of Riddhi Siddhi Enterprises, which challenged the retrospective cancellation of its GST registration. The petitioner’s registration was revoked with effect from September 28, 2017, through an order dated July 25, 2023, following a Show Cause Notice (SCN) issued on July 10, 2023. The SCN cited Section 29(2)(e) of the CGST Act, alleging that the registration was obtained through fraud or misstatement. The petitioner argued that the cancellation order lacked a detailed explanation and due consideration of the implications of retrospective revocation. The court examined the power conferred under Section 29 of the CGST Act, which allows for the cancellation of GST registration, including retrospectively, but emphasized that such cancellations must be reasoned and not applied mechanically.

Referring to previous rulings, including Ramesh Chander vs. Assistant Commissioner of Goods and Services Tax and Delhi Polymers vs. Commissioner, Trade and Taxes, the court reiterated that retrospective cancellation should be based on clear findings and cannot be imposed automatically. The court found that the cancellation order lacked sufficient reasoning, making it unsustainable. Consequently, the High Court quashed the cancellation order while allowing the tax authorities to initiate fresh proceedings in compliance with the law. The judgment reinforces the principle that GST registration cancellations must be justified and not merely procedural.