Smart World Communications Vs Commissioner of Central Tax And CGST (Delhi High Court)
Conclusion: Where the Show Cause Notice did not propose retrospective cancellation of GST registration, the authority could not cancel registration with effect from a prior date and cancellation should operate only from date of SCN i.e., 02.02.2022.
Held: Assessee was a partnership firm. It had closed its business in June 2021 after one of its partners passed away. Subsequently, on February 2, 2022, the GST department issued a show-cause notice (SCN) to the firm. The notice proposed to cancel the registration on the ground that the firm had not been filing its returns. The final order passed by the tax authority, however, cancelled assessee’s registration with retrospective effect. Assessee’s main argument was that this action was illegal because the SCN never mentioned or proposed a retrospective cancellation; it only proposed a simple cancellation. It was held that it was a “settled position in law” that a registration couldnot be cancelled with retrospective effect if the preceding show-cause notice did not specifically propose such an action. The final order could not travel beyond the scope of the notice. The court modified the department’s order, directing that the cancellation of the registration should be considered effective only from the date of the show-cause notice(February 2, 2022), not from an earlier, retrospective date.
