N K Industries Vs Commissioner of Delhi Goods And Services Tax And Anr (Delhi High Court)
In the case of N K Industries v. Commissioner of Delhi Goods And Services Tax, the petitioner challenged the retrospective cancellation of its GST registration and a show cause notice issued in this regard. The petitioner, engaged in the business of manufacturing, retail, and wholesale of Air or Vacuum Pumps and Compressors, possessed GST registration under the Central Goods and Services Tax Act, 2017.
The petitioner argued that the show cause notice did not provide any opportunity to object to the retrospective cancellation of registration. Additionally, the subsequent order of cancellation did not offer reasons for the retrospective action and contradicted itself by referring to a response from the petitioner while stating that no reply had been submitted. Moreover, the order did not specify any dues against the petitioner.
The court observed that the cancellation of registration with retrospective effect cannot be mechanical and must be based on objective criteria. Mere non-filing of returns does not warrant retrospective cancellation covering the period when the returns were filed and the taxpayer was compliant. Additionally, cancellation with retrospective effect affects the input tax credit of the taxpayer’s customers, necessitating careful consideration.
