Shree Bankey Bihari Tarding Company Vs Principal Commissioner of Department of Trade And Taxes And Anr. (Delhi High Court)
The Delhi High Court recently addressed the contentious issue of retrospective cancellation of GST registration in the case of Shree Bankey Bihari Trading Company vs. Principal Commissioner of Department of Trade and Taxes and Another. The court’s ruling clarified the limitations on such cancellations, particularly focusing on the effective date starting from the issuance of the Show Cause Notice (SCN).
The petitioner, M/s Shree Bankey Bihari Trading Company, challenged the retrospective cancellation of its GST registration under the Central Goods and Service Tax Act, 2017. The retrospective cancellation, effective from 31st July 2017, was based on the grounds that the petitioner had not filed returns for a continuous period of six months. The Show Cause Notice issued on 19th September 2019 initiated the proceedings, although it lacked specific reasons and did not inform the petitioner of the retrospective cancellation possibility.
The subsequent order dated 4th October 2019 affirmed the cancellation, citing non-submission of a reply to the Show Cause Notice. However, the order’s rationale was found contradictory and lacked substantive reasoning for the retrospective action taken. Importantly, the court noted that the absence of dues against the petitioner and nil demand further underscored the arbitrary nature of the retrospective cancellation.
