FACTS OF THE CASE

M/s Sumit Saree Centre, a proprietary concern of Mr. Rajesh Kumar, obtained GST registration on 21st July 2017. The Petitioner voluntarily applied for cancellation in April 2023, citing business closure. The GST Officer sought additional information and, due to non‑submission, issued a rejection order. Thereafter, a Show Cause Notice (SCN) was issued alleging non‑filing of returns. The GST Commissioner passed an order cancelling the GST registration retrospectively from 21st July 2017. The Petitioner filed a writ petition challenging the retrospective cancellation as invalid, contending the SCN did not propose retrospective cancellation and denial of opportunity to be heard.

 ISSUES INVOLVED

  1. Whether the impugned cancellation order dated 10th July 2023 cancelling GST registration retrospectively from the date of registration was legally sustainable.
  2. Whether the Show Cause Notice contemplated retrospective cancellation and accorded a fair opportunity to the taxpayer to respond.
  3. Whether retrospective cancellation without reasons and statutory compliance violates principles of natural justice and statutory scheme under Section 29 of the Central Goods and Services Tax Act, 2017. 

PETITIONER’S SUBMISSIONS

• The information sought was already available on the GST portal.
• The SCN did not propose retrospective cancellation.
• Cancellation with retrospective effect was untenable and violative of statutory requirements and principles of natural justice.
• Non‑filing of returns was due to business closure; absence of a real opportunity to reply to SCN. 

RESPONDENT’S CONTENTIONS

• Petitioner had an opportunity to reply but failed to do so.
• Petition was filed belatedly after two years.
• Retrospective cancellation was justified based on non‑compliance with GST return filing regime. 

COURT ORDER / FINDINGS

The High Court found:

  1. Rejection Order lacked reasons.
  2. Petitioner sought cancellation voluntarily; hence cancellation should take effect from the date of SCN (26th July 2023) and not retrospectively from registration date.
  3. The settled legal position is that if an SCN does not envisage retrospective cancellation, such cancellation cannot be mechanically endorsed.
  4. Reliance on earlier precedents such as Subhana Fashion vs Commissioner Delhi Goods and Service Tax, M/s Balaji Industries vs Principal Commissioner CGST Delhi, and Ridhi Siddhi Enterprises vs Commissioner of GST to reaffirm that retrospective cancellation needs clear statutory basis, reasons, and compliance with natural justice.
  5. Cancellation with retrospective effect without fair opportunity and clear grounds is untenable in law.
  6. GST registration to remain valid up to the SCN date; retrospective portion set aside.
  7. Department free to pursue separate proceedings if other violations are found.

IMPORTANT LEGAL CLARIFICATIONS

SCN must expressly contemplate retrospective cancellation – absent this, retrospective effect is invalid.
 Principles of natural justice (opportunity to be heard) are imperative before cancelling GST registration retrospectively.
 Mere non‑filing of returns, without other statutory criteria under Section 29 CGST Act, is not a standalone ground for retrospective cancellation.
This position aligns with recent Delhi High Court precedents rejecting retrospective cancellation where the SCN did not propose it.

SECTIONS AND LEGAL PROVISIONS INVOLVED

• Article 226 & 227, Constitution of India – Judicial review of administrative action.
• Section 29, Central Goods and Services Tax Act, 2017 – Cancellation of registration including retrospective effect.
• Principles of Natural Justice – Duty to provide fair hearing.

Link to download the order - https://delhihighcourt.nic.in/app/showFileJudgment/PMS09092025CW137732025_175223.pdf 

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