Case Law Details
K. Metal Industries Vs Commissioner of GST & Anr. (Delhi High Court)
Introduction: The Delhi High Court, in the case of K. Metal Industries vs Commissioner of GST & Anr., recently delivered a significant judgment on the retrospective cancellation of GST registration. The court addressed the arbitrary nature of such cancellations and emphasized the importance of providing valid reasons.
Detailed Analysis: The petitioner contested an order dated 28.09.2019, which retroactively cancelled their GST registration from 01.07.2017. The order lacked explicit reasons for the cancellation but referred to a Show Cause Notice (SCN) dated 26.09.2019. The SCN proposed cancellation due to the petitioner’s failure to file returns for a continuous six-month period.
In response, the petitioner explained that the firm closed in September 2018 due to a municipal sealing drive. Attempts to surrender the GST registration were hindered by system errors. The petitioner submitted evidence, including a letter requesting cancellation.
The court invoked Section 29(2) of the Central Goods and Services Tax Act, empowering officers to cancel registration retrospectively. However, it stressed that such discretion must not be exercised arbitrarily. Notably, the order cancelled registration for a period when the petitioner had filed returns, yet provided no reason for the retrospective action.
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