Garg Candle Works Vs Commissioner (Delhi High Court)
Delhi High Court has ruled against the retrospective cancellation of a Goods and Services Tax (GST) registration in a case where the taxpayer had already initiated the process to surrender the registration. The court observed that cancelling a registration with back effect based on the failure to file returns after the assessee applied for cancellation was not sustainable.
The case, involving Garg Candle Works and the Commissioner, Delhi High Court, centered on the cancellation of the petitioner’s GST registration, which was effective from July 1, 2017. According to court documents, Garg Candle Works applied for cancellation of its GST registration on May 15, 2023.
Following this application, the GST Department issued a notice on June 14, 2023, seeking further details from the petitioner. The department’s concerns included the non-filing of a profit and loss account as of the business closure date, failure to file due returns up to the discontinuation date, and unpaid taxes and interest on mismatches between GSTR-2A/3B and GSTR-1/3B. The petitioner, however, contended that they were unaware of this notice, having already applied for cancellation.
Subsequently, on April 30, 2024, the department rejected the petitioner’s cancellation application. The grounds for rejection reiterated the points raised in the earlier notice, specifically the absence of a profit and loss account, unfiled returns, and un-discharged tax liabilities due to return mismatches.
