Case Law Details
Northern Hosiery Factory Through Its Proprietor Mr. Sunil Kumar Bansal Vs Commissioner of Central Goods And Services Tax And Anr (Delhi High Court)
Introduction: In a pivotal decision by the Delhi High Court in the case of Northern Hosiery Factory Through Its Proprietor Mr. Sunil Kumar Bansal Vs Commissioner of Central Goods And Services Tax And Anr, the court addressed the issue of GST registration cancellation without adequate reasoning and retrospective effect from July 1, 2017. This ruling sheds light on the critical aspects of procedural adherence and the rights of taxpayers under the GST regime.
Detailed Analysis: The petitioner, Northern Hosiery Factory, challenged the order dated August 22, 2023, which canceled its GST registration retrospectively from July 1, 2017. The bone of contention was the issuance of a Show Cause Notice (SCN) on July 11, 2023, without specifying detailed reasons for such cancellation and failing to inform the petitioner about the retrospective effect of the cancellation.
The petitioner’s applications for voluntary cancellation of registration, submitted on various dates across 2022 and 2023, were repeatedly rejected by the authorities on the grounds of non-submission of replies to queries raised by the Department. Despite this, the petitioner claimed to have furnished all necessary details in the applications themselves and continued to file requisite returns until July 2023.
The Delhi High Court noted the lack of specific reasons in both the SCN and the impugned order for the cancellation of registration. Furthermore, the court highlighted that Section 29(2) of the GST Act allows for retrospective cancellation of GST registration but emphasized that such decisions must be based on objective criteria rather than subjective satisfaction.
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