GST Registration Cancellation cannot be Withheld Due to Liability Assessment

Guru Enterprises Vs Principal Commissioner of Department of Trade And Taxes (Delhi High Court)

In a recent ruling, the Delhi High Court addressed the issue of Goods and Services Tax (GST) registration cancellation in the case of Guru Enterprises Vs Principal Commissioner of Department of Trade And Taxes. The court emphasized that the cancellation of a taxpayer’s GST registration should not be delayed based on assessments of tax liabilities.

The case arose when Guru Enterprises applied for the cancellation of its GST registration on July 3, 2024, citing the discontinuation of its business operations. Following this request, the proper officer issued a notice on July 8, 2024, seeking additional information from the petitioner. This included a request for the residential address for future correspondence and a reconciliation statement concerning the declared tax liability for the financial year 2023-24.

In light of the petitioner’s application and subsequent documentation, the court considered it appropriate to direct the proper officer to expedite the processing of the cancellation request. The court’s decision underscored a critical aspect of GST compliance: while a taxpayer may seek cancellation of their registration, this does not eliminate their responsibility for any outstanding tax obligations.

The Delhi High Court clarified that the cancellation of the GST registration should not be contingent upon the assessment of the taxpayer’s liability. The ruling established that even if a GST registration is canceled, the taxpayer remains liable for any taxes, interest, or penalties that may have accrued prior to the cancellation. The court noted that the petitioner was not absolved of these responsibilities due to the registration cancellation.

FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT

1. Issue notice.

2. The learned counsel for the respondent accepts notice.

3. The petitioner has filed the present petition, inter alia, praying as under:-

“a) issue a writ of mandamus or any other appropriate writ or direction to cancel the GST registration of the petitioner on the request of the petitioner by applying an application reference number AA070724005437A dated 03.07.2024;”

4. The petitioner had filed an application dated 03.07.2024 seeking cancellation of its Goods and Services Tax (GST) registration as the petitioner had discontinued its business. Pursuant to the said application, the proper officer issued a notice dated 08.07.2024 seeking additional information including the residential address for future correspondence and the reconciliation statement regarding the declared tax liability for the financial year 2023-24. The petitioner claims that he had furnished the documents as required by the notice dated 08.07.2024.

5. In the given circumstances, we consider it apposite to direct the proper officer to process the petitioner’s application as expeditiously as possible.

6. It is also clarified that cancellation of the petitioner’s GST registration is not required to be withheld on account of any assessment of the petitioner’s liability. This is because the petitioner is neither absolved of its liability to pay tax, interest or penalty nor of the consequences of statutory non-compliance, on account of cancellation of the petitioner’s GST registration.

7. The petition stands disposed of in the aforesaid terms. Pending application also stands disposed of.