Retrospective GST Cancellation Quashed for lack of notice & reasoned justification

New Vision Enterprises Through Its Proprietor Mr Dinesh Jha Vs Commissioner Delhi Goods And Service Tax & Ors. (Delhi High Court)

Delhi High Court has ruled against the retrospective cancellation of a Goods and Services Tax (GST) registration in the case of New Vision Enterprises vs. Commissioner Delhi Goods and Service Tax & Ors. The court found that the final order, which cancelled the petitioner’s GST registration retroactively from September 24, 2022, was invalid due to a lack of proper notice and reasoned justification. The original Show Cause Notice (SCN) issued to the petitioner did not indicate any intention to cancel the registration with retrospective effect.

The court referenced previous rulings, notably Riddhi Siddhi Enterprises vs. Commissioner of Goods and Services Tax (CGST), South Delhi & Anr. and Ramesh Chander vs. Assistant Commissioner of Goods and Services Tax, Dwarka Division, CGST Delhi & Anr., to emphasize the importance of reasoned orders when cancelling GST registrations retrospectively. It highlighted that while Section 29 of the Central Goods and Services Tax Act, 2017, grants the authority to cancel registrations retroactively, this power must be exercised judiciously. The court stressed that mere existence of this power does not justify its automatic application and that the cancellation order must clearly articulate the reasons for retrospective action.