Case Law Details
Amar Enterprises Through Its Proprietor Vs Commissioner of Delhi Goods And Services Tax And Anr (Delhi High Court)
Introduction: The Delhi High Court, in the case of Amar Enterprises Through Its Proprietor vs. Commissioner of Delhi Goods And Services Tax And Anr, recently addressed the contentious issue of retrospective cancellation of GST registration. The petitioner challenged an order dated 08.08.2023, wherein the GST registration was cancelled retrospectively from 03.07.2017. Additionally, the petitioner contested the Show Cause Notice dated 29.10.2021.
Detailed Analysis: The Show Cause Notice, dated 29.10.2021, cited the reason for potential cancellation as the petitioner’s failure to file returns for a continuous period of six months. However, crucially, it did not explicitly inform the petitioner about the possibility of retrospective cancellation. The subsequent order, dated 08.08.2023, lacked clarity in justifying the retrospective cancellation, stating only that it was based on Section 29(2)(c) – failure to furnish returns.
The petitioner’s counsel highlighted the petitioner’s decision to cease business activities, emphasizing the lack of interest in continuing operations. The court noted that the registration had previously been cancelled on 11.08.2021, with restoration after an application for revocation on 01.09.2021. The subsequent cancellation, through the impugned order, raised concerns regarding the absence of detailed reasons and the retrospective nature of the decision.
The court underscored that Section 29(2) allows the proper officer to cancel GST registration from any retrospective date, but such a decision should not be arbitrary. The satisfaction leading to cancellation must be based on objective criteria, and the absence of returns alone should not warrant automatic retrospective cancellation. The court also acknowledged potential consequences for the taxpayer’s customers, emphasizing the need for justified and warranted retrospective cancellations.
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