Facts of the Case

M/s. Pratham International, engaged in trading gold jewellery under GSTIN 07ADIPG0941R1Z8, had its business slow down in 2023 due to financial constraints, leading to suspension of operations and consequent non-compliance with GST obligations from May 2023. A show cause notice dated 23rd May, 2023 (which did not state any reason and did not propose retrospective cancellation) led to suspension of registration, and eventually the GST Department cancelled the registration on 4th July, 2024 retrospectively from 1st July, 2017 — the very date of the petitioner's original registration — on the ground that no returns had been filed after May 2023. Separately, a parallel show cause notice dated 14th November, 2024 regarding ITC discrepancies, followed by another SCN dated 18th December, 2024, culminated in an order dated 24th April, 2025 confirming a demand of Rs.2,71,09,090/- including tax, interest and penalty.

Issues Involved

  1. Whether a GST registration can be cancelled with retrospective effect back to the date of original registration when the underlying show cause notice never proposed such retrospective cancellation.
  2. Whether the petitioner should be given a further opportunity to restore its registration on filing pending returns and paying applicable dues, given its affidavit expressing willingness to comply.
  3. Whether the separate, substantial demand order dated 24th April, 2025 concerning ITC discrepancies should be independently examined or left to the petitioner's own statutory remedies.

Petitioner's Arguments

  • The petitioner, through its proprietor's affidavit, explained that business operations had slowed due to financial constraints, leading to suspension and eventual non-compliance, and that the retrospective cancellation only came to its knowledge in July 2025 when it attempted to reset its GST credentials to resume compliance.
  • It was submitted that the impugned SCN dated 23rd May, 2023 did not propose to cancel the registration retrospectively, and following settled Delhi High Court precedent — Ridhi Sidhi Enterprises, Akash Bansal (Proprietor M/S Shri Prem Ji Traders), Subhana Fashion and M/S Balaji Industries — such retrospective cancellation without notice is impermissible.
  • The petitioner undertook to pay the applicable tax, interest, penalty and late fees necessary to bring its GST compliance current, and sought restoration of its registration for that purpose.

Respondent's Arguments

  • The order does not record a substantive contest by the Department to the retrospective-cancellation challenge, focusing instead on the separate April 2025 demand order concerning ITC discrepancies, which the Court left open for the petitioner's own remedies.

Court Order / Findings

  • The Court found that the impugned SCN dated 23rd May, 2023 did not propose retrospective cancellation, yet the resultant order had cancelled the registration retrospectively to 1st July, 2017 — contrary to the settled position in Ridhi Sidhi Enterprises and reiterated in Akash Bansal, Subhana Fashion and M/S Balaji Industries, that where an SCN does not contemplate retrospective cancellation, the cancellation can only take effect from the date of the SCN.
  • Holding the retrospective cancellation unsustainable, the Court set aside the order dated 4th July, 2024, subject to the petitioner filing all its returns and depositing the tax and late fee by 15th November, 2025, with access to the GST portal to be restored within one week to enable such compliance.
  • As regards the separate order dated 24th April, 2025 confirming the substantial ITC-related demand, the Court left the petitioner free to avail its remedies in accordance with law, while equally leaving the Department free to proceed against the petitioner for any other infractions.

Important Clarification

  • Retrospective cancellation of GST registration — even back to the date of original registration — is unsustainable wherever the triggering show cause notice does not itself propose retrospective effect; this is now firmly settled across Delhi High Court decisions including Ridhi Sidhi Enterprises, Akash Bansal, Subhana Fashion and M/S Balaji Industries.
  • Where an assessee affirmatively undertakes, by affidavit, to clear pending returns and dues, courts readily condition restoration of registration on actual compliance within a fixed deadline, restoring portal access to enable it.
  • Setting aside a defective retrospective-cancellation order does not, by itself, disturb a separate substantive demand order (here, on ITC discrepancies) — that remains open to challenge through the assessee's ordinary statutory remedies.

Sections Involved

  • Section 29 of the Central Goods and Services Tax Act, 2017 – governs cancellation of GST registration; the retrospective effect given here was found unsupported by the underlying SCN.
  • Section 74 of the CGST Act, 2017 – the provision under which the separate ex-parte order on ITC discrepancies (18th December 2024 SCN) was passed, left open for the petitioner's remedies.

Decision – In Favour of

In favour of the assessee on the cancellation issue — the retrospective cancellation was set aside on conditions, while the separate substantive demand order was left open to be independently challenged.

Case Details

Court: High Court of Delhi at New Delhi
Case No.: W.P.(C) 15019/2025 & CM APPL. 61864/2025
Coram: Hon'ble Justice Prathiba M. Singh and Hon'ble Justice Shail Jain
Date of Order: 26.09.2025

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