Case Law Details
Namdhari Timber Private Limited Vs Union of India & Ors. (Delhi High Court)
The Delhi High Court considered a writ petition challenging a show cause notice dated 28 November 2024 and an order dated 5 March 2025 cancelling the petitioner’s GST registration retrospectively from 1 July 2017. The petitioner did not contest cancellation itself but objected to its retrospective effect, stating that cancellation may be applied from the date of the show cause notice.
The record showed that earlier proceedings had arisen when the petitioner sought amendment of its principal place of business, which was rejected ex parte due to non-submission of documents. Subsequently, a show cause notice was issued alleging that the petitioner’s place of business was found non-existent upon inspection. The petitioner neither replied to the notice nor appeared for hearing, following which the registration was cancelled with retrospective effect.
The Court noted that it is a settled legal position that retrospective cancellation cannot be imposed unless the show cause notice specifically contemplates such action. Since the impugned notice did not indicate retrospective cancellation, the resulting order granting such effect was unsustainable.
Accordingly, the Court set aside the retrospective operation of the cancellation order. It clarified that the Department retains the right to initiate fresh proceedings, including issuance of a new show cause notice, if grounds such as non-existence of business are established. The petitioner was also permitted to place relevant material, including the de-sealing of its premises, before authorities in any future proceedings.
The petition was disposed of in these terms.
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 Article 226 of the Constitution of India, inter alia, assailing the order dated 5th March, 2025 (hereinafter, ‘impugned order’) passed by the Respondent No. 3 and the Show Cause Notice dated 28th November, 2024 (hereinafter, ‘SCN’) which led to the passing of the impugned order.
3. The Petitioner in this case challenges the retrospective cancellation of the Goods and Service Tax Registration (hereinafter, ‘GST Registration’) of the Petitioner which has been directed vide the impugned order dated 05th March, 2025 w.e.f. 1st July, 2017.
4. Counsel for the Petitioner submits that the Petitioner has no objection if the GST Registration cancellation is given effect from the date of the issuance of the SCN i.e. from 28th November 2024.
5. The counter affidavit has been filed in this matter, as per which the stand of the Respondent Department is that no reply was filed by the Petitioner to the show cause notice dated 3rd October, 2023 which was issued by the Department after an application was filed by the Petitioner seeking amendment of its principal place of business.
6. Thereafter, an ex-parte order was passed on 2nd May, 2024, rejecting the application for amendment of the principal place of business on the ground that no documents had been placed on record by the Petitioner.
7. The SCN was then issued to the Petitioner on 28th November, 2024, for cancellation of the GST Registration of the Petitioner, stating that as per the information received from the Assistant Commissioner (AE), CGST, West, a physical inspection was carried out at the Petitioner’s principal place of business and the same was found to be non-existent. A time period of seven days was granted to the Petitioner to file a reply to the SCN.
8. However, the Petitioner neither filed any reply to the SCN, nor appeared for personal hearing. Accordingly, the GST Registration of the Petitioner was then suspended vide the impugned order and was given retrospective applicability w.e.f. 1st July, 2017.
9. It is a settled position in law that if a SCN does not contemplate retrospective cancellation of GST Registration, the cancellation cannot be given retrospective effect. This position has been reiterated by this Court in various decisions including in ‘Subhana Fashion v. Commissioner Delhi Goods and Service Tax (W.P. (C) 12255/2024)’, ‘M/S Balaji Industries v. The Principal Commissioner CGST Delhi North Commissionerate & Anr. (W.P.(C) 11913/2024)’ and ‘Ridhi Sidhi Enterprises v. Commissioner of Goods & Service Tax (CGST), South Delhi & Anr. (W.P.(C) 8061/2024)’.
10. Accordingly, the retrospective cancellation of the GST Registration of the Petitioner is set aside. This would, however, be without any prejudice to the rights of the Department to take any action if the Petitioner was found to be nonexistent or on any other grounds that could warrant the issuance of a fresh show cause notice.
11. At this stage, ld. Counsel for the Petitioner points out that in the de-sealing memo issued by the Department of Trade and Taxes on 16th April, 2024, the premises of the Petitioner was de-sealed. This itself proves the fact that the Petitioner was existing at the relevant place of business.
12. Under these circumstances, in case a fresh SCN is issued, the Petitioner may bring this fact to the notice of the Department who shall then proceed in accordance with law.
13. The impugned cancellation order is set aside in the above terms.
14. The present petition is disposed of. Pending applications, if any, are also disposed of.
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