Case Law Details
R.K. Metal Industries Vs Commissioner of GST & Anr. (Delhi High Court)
Introduction: In a significant legal development, the Delhi High Court addressed the case of R.K. Metal Industries challenging the retrospective cancellation of their GST registration. The court’s judgment sheds light on the limitations of canceling GST registration based on non-filing of returns and the need for a reasoned approach.
Detailed Analysis: R.K. Metal Industries filed a petition against the order dated 28.09.2019, which cancelled their GST registration retrospectively from 01.07.2017. The impugned order lacked any recorded reasons for cancellation but referred to a Show Cause Notice (SCN) dated 26.09.2019.
The proper officer initiated the SCN, proposing cancellation on the grounds of non-filing of returns for a continuous six-month period. In response, R.K. Metal Industries explained the closure of the firm in September 2018 due to a municipal sealing drive. They attempted to surrender the GST registration, encountering system errors. The petitioner submitted a letter indicating the request for cancellation.
Section 29(2) of the Central Goods and Services Tax Act, 2017 grants the proper officer the power to cancel registration, even retrospectively, based on deemed fit circumstances. However, the discretion must not be arbitrary. The judgment emphasized that the only ground for proposing cancellation was the non-filing of returns for six months, yet the registration was canceled for a period when returns were filed. Moreover, the impugned order lacked any reasons for the retrospective cancellation.
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