Case Law Details
Delhi Polymers Vs Commissioner (Delhi High Court)
Introduction: Delhi Polymers filed an appeal against the retrospective cancellation of its GST registration by the GST department. The Delhi High Court examined the legality of the cancellation, especially its retrospective nature, and provided crucial directives in this regard.
Detailed Analysis: The crux of the matter revolved around the retrospective cancellation of Delhi Polymers’ GST registration by the GST department, effective from July 1, 2017. The cancellation was based on a Show Cause Notice issued to the petitioner, citing reasons for potential cancellation related to tax payment delays.
However, the Court noted several inconsistencies and shortcomings in both the Show Cause Notice and the subsequent cancellation order. Firstly, the Show Cause Notice failed to mention the possibility of retrospective cancellation, depriving the petitioner of a fair opportunity to contest this aspect. Additionally, the cancellation order lacked clear reasoning and contained contradictory statements regarding the petitioner’s response to the notice.
The Court emphasized that GST registration cannot be cancelled retrospectively without valid reasons. It highlighted that such cancellations must be based on objective criteria and cannot be merely due to a taxpayer’s failure to file returns for a specific period. Furthermore, the Court noted the significant implications of retrospective cancellation on input tax credit for the taxpayer’s customers.
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