Case Law Details
Rajni Gupta Vs Principal Commissioner State GST and Anr (Delhi High Court)
Introduction: The Delhi High Court has addressed a critical issue in the case of Rajni Gupta vs. Principal Commissioner State GST, challenging the retrospective cancellation of GST registration. The court’s verdict, dated 12.09.2020, emphasized that GST registration cannot be annulled retrospectively merely for non-filing of GSTR for some period. This article delves into the details of the case, examining the court’s reasoning and the implications of this significant judgment.
Detailed Analysis: The petitioner, Rajni Gupta, contested the order dated 12.09.2020, which retroactively canceled the GST registration from 01.07.2017. Rajni Gupta, engaged in the manufacturing paint business, ceased operations on 31.01.2019, and promptly applied for registration cancellation on 25.02.2019. The court noted that the provisional registration was canceled on 21.09.2019 and 19.03.2020, well before the impugned order.
The impugned order, dated 12.09.2020, relied on the non-filing of returns for a continuous six-month period as grounds for cancellation. However, the court observed that once the registration stood canceled, there was no obligation for the petitioner to file returns. The court emphasized Section 29(2) of the Central Goods and Services Tax Act, stating that retrospective cancellation should not be a mechanical process but based on objective criteria.
The court pointed out that canceling registration with retrospective effect has consequences for the taxpayer’s customers, affecting their input tax credit. It highlighted that such consequences should be considered and justified by the proper officer before taking such an action. Additionally, the court noted that the show cause notice did not inform the petitioner about the retrospective cancellation, denying an opportunity to object.
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