Ridhi Sidhi Enterprises Vs Commissioner of Goods & Service Tax (CGST) (Delhi High Court)
Summary: The writ petition challenged an order dated 25 July 2023 by which the petitioner’s GST registration was cancelled with retrospective effect from 28 September 2017. The Show Cause Notice (SCN) preceding the cancellation was issued on 10 July 2023, alleging that the registration had been obtained through fraud, wilful misstatement, or suppression of facts under Section 29(2)(e) of the Central Goods and Services Tax Act, 2017. The SCN required the petitioner to respond within seven working days and appear for a personal hearing, failing which the matter would be decided ex parte. The registration was also suspended from the date of the SCN.
Subsequently, the registration was cancelled with retrospective effect from 28 September 2017. The cancellation order referred to the SCN but did not provide detailed reasons justifying retrospective cancellation. It also required the petitioner to file pending returns and clarified that cancellation would not affect liability for prior dues.
The Court examined the statutory framework under Section 29 of the CGST Act, which permits cancellation of registration, including with retrospective effect, subject to specified conditions. It observed that although the provision empowers retrospective cancellation, such power must be exercised based on proper reasoning and application of mind. The Court emphasized that retrospective cancellation carries serious consequences and therefore requires clear justification.
