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Case Law Details

Case Name : Ganesh Sales Corporation Vs Union Of India & Ors. (Delhi High Court)
Appeal Number : W.P.(C) 3529/2024
Date of Judgement/Order : 07/03/2024
Related Assessment Year :

Ganesh Sales Corporation Vs Union Of India & Ors. (Delhi High Court)

Introduction: In a recent case before the Delhi High Court, Ganesh Sales Corporation contested the retrospective cancellation of its GST registration. The court’s judgment highlighted critical procedural errors in the show cause notice and subsequent order issued by the tax authority.

Detailed Analysis

1. Cancellation Order and Show Cause Notice: The petitioner challenged an order dated 29.02.2024 that retrospectively canceled its GST registration from 05.05.2018. The dispute originated from a show cause notice issued on 05.01.2024, alleging registration obtained through fraudulent means.

2. Procedural Lapses: The show cause notice lacked crucial details, such as the name of the officer to appear before and the venue. Additionally, it failed to notify the petitioner of the retrospective cancellation possibility, depriving them of the chance to object.

3. Lack of Justification: The subsequent order also lacked substantive reasoning for the cancellation, merely referencing the show cause notice and specifying the effective date of cancellation.

4. Legal Analysis: The court highlighted Section 29(2) of the Central Goods and Services Tax Act, 2017, emphasizing that registration cancellation, especially retrospectively, must be justified objectively. Mere non-filing of returns doesn’t warrant retrospective cancellation.

5. Consideration of Consequences: The court noted the adverse impact on the petitioner’s customers due to retrospective cancellation, underlining the necessity for the tax authority to consider such ramifications before making a decision.

6. Judgment and Restoration: Given the procedural deficiencies and lack of substantive reasoning, the court set aside the cancellation order and restored the petitioner’s GST registration. However, the petitioner must fulfill necessary compliances and file requisite returns as per regulations.

Conclusion: The Delhi High Court’s ruling in the case of Ganesh Sales Corporation underscores the importance of procedural integrity and substantive justification in administrative actions such as GST registration cancellation. The judgment serves as a reminder to tax authorities to adhere strictly to legal procedures and provide sufficient reasoning while making decisions affecting taxpayers’ rights.


1. Petitioner impugns order dated 29.02.2024 whereby the GST registration of the petitioner was cancelled retrospectively with effect from 05.05.2018. Petitioner also impugns Show Cause Notice dated 05.01.2024.

2. Vide Show Cause Notice dated 05.01.2024, petitioner was called upon to show cause as to why the registration be not cancelled for the following reason:-

Section 29(2)(e)- registration obtained by means of fraud, wilful misstatement or suppression of facts.

3. Petitioner is engaged in the business of the trading of ferrous and non-ferrous metals and possessed GST registration.

4. Show Cause Notice dated 05.01.2024 was issued to the Petitioner seeking to cancel its registration on the ground “Section 29(2)(e)- registration obtained by means of fraud, wilful misstatement or suppression of facts. Said Show Cause Notice required the petitioner to appear on 11.01.2024 at 2:05 PM before the undersigned i.e. authority issuing the notice. However, the said Notice does not give the name of the officer or place where the petitioner has to appear. Further, the digital signatures in the Show Cause Notice merely mentions “digitally signed by DS GOODS AND SERVICES TAX NETWORK 07.

5. Further, the said Show Cause Notice also does not put the petitioner to notice that the registration is liable to be cancelled retrospectively. Thus, the petitioner had no opportunity to even object to the retrospective cancellation of the registration.

6. Thereafter, the impugned order dated 29.02.2024 passed on the said Show Cause Notice also does not give reasons of cancellation. It merely states “reference to show cause notice issued dated 05.01.2024” and subsequently states “effective date of cancellation of your registration is 05.05.2018”.

7. We notice that the Show Cause Notice and the impugned order are bereft of any details accordingly the same cannot be sustained. Neither the Show Cause Notice, nor the order spell out the reasons for retrospective cancellation.

8. In terms of Section 29(2) of the Central Goods and Services Tax Act, 2017, the proper officer may cancel the GST registration of a person from such date including any retrospective date, as he may deem fit if the circumstances set out in the said sub-section are satisfied. The registration cannot be cancelled with retrospective effect mechanically. It can be cancelled only if the proper officer deems it fit to do so. Such satisfaction cannot be subjective but must be based on some objective criteria. Merely, because a taxpayer has not filed the returns for some period does not mean that the taxpayer’s registration is required to be cancelled with retrospective date also covering the period when the returns were filed and the taxpayer was compliant.

9. It is important to note that, according to the respondent, one of the consequences for cancelling a tax payer’s registration with retrospective effect is that the taxpayer’s customers are denied the input tax credit availed in respect of the supplies made by the tax payer during such period. Although, we do not consider it apposite to examine this aspect but assuming that the respondent’s contention in this regard is correct, it would follow that the proper officer is also required to consider this aspect while passing any order for cancellation of GST registration with retrospective effect. Thus, a taxpayer’s registration can be cancelled with retrospective effect only where such consequences are intended and are warranted.

10. In view of the aforesaid, order dated 29.02.2024 cannot be sustained and is accordingly set aside. The GST registration of the petitioner is restored. The petitioner shall, however, make all necessary compliances and file the requisite returns and information inter alia in terms of Rule 23 of the Central Goods and Services Tax Rules, 2017.

11. It is clarified that Respondents are also not precluded from taking any steps for recovery of any tax, penalty or interest that may be due in respect of the subject firm in accordance with law including retrospective cancellation of the GST registration.

12. The petition is accordingly disposed of in the above terms.

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