CGST Act Permits Fresh GST Registration Despite Previous Cancellation: Delhi HC

Salwa Foods Proprietorship Mr. Amaan Sheikh Vs Commissioner of Central Goods and Services Tax (Delhi High Court)

Delhi High Court, in Salwa Foods vs. Commissioner of Central Goods and Services Tax, addressed the petitioner’s challenge against the cancellation of its GST registration with retrospective effect from December 28, 2018. The writ petition was filed belatedly, but the Court acknowledged that the Central Goods & Services Tax Act, 2017 (CGST Act) does not bar a taxpayer from applying for a fresh registration even if a prior registration was canceled.

The Court referred to a Circular issued by the Central Board of Indirect Taxes and Customs (CBIC) on March 28, 2019, which outlines the process for re-registration. The Circular directs tax authorities to carefully evaluate applications for fresh registration, particularly when an applicant’s previous registration was canceled. It also provides that failure to apply for revocation of cancellation may be considered a deficiency under Rule 9(2) of the CGST Rules, potentially leading to rejection of the new registration application.

Furthermore, tax officers are required to compare details from earlier registrations with new applications, verifying past compliance issues. If a previous cancellation was due to violations under Section 29(2)(b) and (c) of the CGST Act, and those violations persist, fresh registration may be denied. The Court noted that applicants must provide satisfactory justification for a new registration, or risk rejection under Rule 9(4) of the CGST Rules.

Relying on these provisions, the Court allowed the petitioner to approach the competent authority for fresh registration. The Court directed that any such application be processed per the law and in accordance with the CBIC Circular. This decision aligns with similar rulings where courts have permitted fresh registration applications following procedural compliance, ensuring that businesses are not indefinitely barred due to past cancellations.

1. The writ petitioner impugns an order dated 09 December 2022 pursuant to which its registration under the Central Goods & Services Tax Act, 2017 [“CGST Act”] came to be cancelled with retrospective effect from 28 December 2018.

2. We take note of the belated challenge which stands mounted by way of the instant writ petition. We also bear in consideration that the CGST Act does not disentitle or render the petitioner ineligible to apply for registration afresh and notwithstanding its registration having been cancelled on a previous occasion.

3. We take note of the following provisions which are made in a Circular dated 28 March 2019 issued by the Central Board of Indirect Taxes and Customs and which reads thus:

“4. It is hereby instructed that the proper officer may exercise due caution while processing the application for registration submitted by the taxpayers, where the tax payer is seeking another registration within the State although he has an existing registration within the said State or his earlier registration has been cancelled. It is clarified that not applying for revocation of cancellation of registration along with the continuance of the conditions specified in clauses and (c) of sub-section (2) of section 29 of the CGST Act shall be deemed to be a “deficiency” within the meaning of sub-rule (2) of rule 9 of the CGST Rules. The proper officer may compare the information pertaining to earlier registrations with the information contained in the present application, the grounds on which the earlier registration(s) were cancelled. The data may be verified on common portal by fetching the details of registration taken on the PAN mentioned in the new application vis-à-vis cancellation of registration obtained on same PAN is displayed on the common portal to both the applicant and the proper officer. Further, if required, information submitted by applicant in S.No.21 of FORM GST REG-01 regarding details of proprietor, all partner/Karta/Managing Directors and whole time Director/members of Managing Committee of Associations/Board of Trustees etc. may be analysed vis-à- vis any cancelled registration having same details.

5. While considering the application for registration, the proper officer shall ascertain if the earlier registration was cancelled on account of violation of the provisions of clauses (b) and (c) of sub-section (2) of section 29 of the CGST Act and whether the applicant has applied for revocation of cancellation of registration. If proper officer finds that application for revocation of cancellation of registration has not been filed and the conditions specified in clauses (b) and of sub-section (2) of section 29 of the CGST Act are still continuing, then, the same may be considered as a ground for rejection of application for registration in terms of sub-rule (2) read with sub-rule (4) of rule 9 of CGST Rules. Therefore, it is advised that where the applicant fails to furnish sufficient convincing justification or the proper officer is not satisfied with the clarification, information or documents furnished, then, his application for fresh registration may be considered for rejection.”

4. We, consequently, permit the petitioner to approach the competent authority of the respondents for the grant of registration afresh. Any such application that may be made, shall be disposed of in accordance with law and bearing in mind the provisions of the Circular which we have noticed hereinabove.

5. The writ petition shall stand disposed of on the aforesaid terms.