Shivi Kansal Vs Union of India (Delhi High Court)
Delhi High Court allowed the petition filed by Shivi Kansal against the retrospective cancellation of the GST registration of his late father’s firm, M/s Kansal Associates, effective July 1, 2017. The firm, a sole proprietorship of Late Mr. Naresh Kansal, had its registration cancelled via an order dated August 9, 2023.
The core issue was the lack of due process following the sole proprietor’s death on April 28, 2021, during the COVID-19 pandemic. The petitioner had informed the authorities via Form GST REG-16 in February 2022 about the proprietor’s demise. However, a Show Cause Notice (SCN) was subsequently issued on July 25, 2022, citing failure to pay collected tax, leading to the cancellation order without any reply or hearing on the merits.
The Court noted that the petitioner learned of the retrospective cancellation only when suppliers complained about their refunds being held up. Recognizing the unfortunate circumstances of the proprietor’s death during the pandemic and the subsequent failure to secure a hearing, the Court held that the petitioner was denied a fair opportunity.
The Delhi High Court set aside the impugned cancellation order and directed the following:
1. The petitioner must be given a fresh opportunity to file a reply to the SCN by October 31, 2025.
2. Upon filing the reply, the Adjudicating Authority must provide a personal hearing and pass a fresh reasoned order.
3. The petitioner must disclose details of affected suppliers to enable the Department to address related refund issues.
This ruling underscores the necessity of upholding natural justice principles by granting the legal representative a proper opportunity to defend the firm’s position, particularly following the death of the proprietor. Access to the GST Portal was also mandated for the petitioner within one week.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. This hearing has been done through hybrid mode.
2. The present petition has been filed by the Petitioner under Articles 226 and 227 of the Constitution of India, inter alia, assailing the impugned order for cancellation of GST registration dated 9th August 2023 (hereinafter, ‘impugned order’) by which the Petitioner’s GST registration has been cancelled retrospectively e.f. 1st July 2017.
3. The petition has been filed by Mr. Shivi Kansal, whose father had obtained a GST registration in the name of the firm, M/s Kansal Associates. The same was a sole proprietary concern of Late Mr. Naresh Kansal. The GST Registration No. of the proprietorship is 07AGSPK2607H1ZA and PAN Card No. is AGSPK2607H. The GST registration of the said firm was obtained on 1st July 2017.
4. On 28th April 2021, the sole proprietor of M/s Kansal Associates had passed away and thereafter, the Petitioner had filed Form GST REG-16 giving clear reasons that the sole proprietor of the said firm has passed away and at the relevant point in time e., 27th February 2022, no proceeding was stated to be pending against the firm.
5. However, thereafter, it came to the knowledge of the Petitioner that a Show Cause Notice (hereinafter, ‘SCN’) has been issued to the Petitioner on 25th July 2022 on the following grounds:
“1. Collects any amount as representing the tax but fails to pay the same to the account of the Central/State Government beyond a period of three months from the date on which such payment becomes due.”
6. No reply was filed by the Petitioner to the said SCN and the impugned order came to be passed without hearing the Petitioner on merits.
7. On a query from this Court, ld. Counsel for the Petitioner submits that the reason as to how the Petitioner came to know of the SCN and the impugned order was that some suppliers of the Petitioner had contacted the Petitioner in respect of non-process of refund of the suppliers because of the retrospective cancellation of the GST registration of the Petitioner.
8. Since the Petitioner has not had an opportunity of dealing with the SCN as also because of the unfortunate demise of the sole proprietor of the firm during COVID-19 pandemic, the Petitioner is given an opportunity to file a reply to SCN dated 25th July 2022.
9. Upon the reply being filed, the Petitioner be given personal hearing and a reasoned order be passed in respect of the SCN.
10. The impugned order dated 9th August 2025 is set aside. Reply be filed by the Petitioner by 31st October 2025. The Petitioner shall also disclose in its reply, the details of the suppliers whose refund has been held up so that the Department can look into the same before deciding the SCN. The contact details of the Petitioner are as under:
- Email Address:com
- Mobile No.: 9896111022
11. Access to the GST Portal shall be made available to the Petitioner within a period of one week. Needless to add that this Court has not gone into the merits of the impugned order.
12. The petition is disposed of in the above terms. Pending applications, if any, are also disposed of.
