Sumit Saree Centre Vs Commissioner of DGST & Anr. (Delhi High Court)
Conclusion: Where show-cause notice (SCN) that initiated the proceeding did not specifically state or propose that the cancellation would be from a an earlier, retrospective date, the cancellation of the registration should be considered effective only from the date of the show-cause notice.
Held: Assessee-proprietary concern had obtained GST registration on 21st July, 2017. On 26th April, 2023, assessee filed an application for cancellation of GST registration due to discontinuation/closure of business. Department issued a notice sought information on address for future correspondence and file return for March 2023. Since assessee failed to furnish the requested information, a rejection order was passed by the Sales Tax Officer. Subsequently, a Show Cause Notice (SCN) was issued by the same authority, proposing cancellation of GST registration on the ground of non-filing of returns as prescribed under the law. Assessee contended that, since the business had been discontinued, the returns were not filed, which led to the passing of the impugned order cancelling the registration retrospectively from 21st July, 2017. On behalf of assessee, it was submitted that the information sought by the GST Department was already available on the portal. Further, due to discontinuation of business, assessee did not access the GST portal and failed to file a reply to the SCN. Importantly, it was argued that the SCN did not propose retrospective cancellation, and therefore, the impugned order cancelling the registration retrospectively was invalid and untenable. It was held that if a Show Cause Notice did not contemplate retrospective cancellation, then an order directing retrospective cancellation could not be sustained. This position had been reaffirmed in various decisions, including Subhana Fashion v. Commissioner, Delhi Goods and Services Tax, W.P.(C) 12255/2024; M/s Balaji Industries v. Principal Commissioner, CGST Delhi North, W.P.(C) 11913/2024; Ridhi Sidhi Enterprises v. Commissioner of Goods & Service Tax (CGST), South Delhi, W.P.(C) 8061/2024. 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, not from an earlier, retrospective date. The Court also clarified that this decision did not prevent the GST department from taking any other separate legal action against the assessee for any other violations of the law that might have been found.
