Facts of the Case

The Petitioner, M/s Smart World Communications (a partnership firm), challenged the order cancelling its GST registration dated 17 March 2022. The GST registration was cancelled with retrospective effect from 29 September 2018, although the Show Cause Notice (SCN) dated 2 February 2022 did not propose retrospective cancellation as a ground in the SCN. The business had ceased operations in June 2021 and one partner had passed away prior to filing the writ petition.

Issues Involved

  1. Whether the cancellation of GST registration can be made retrospective where the SCN did not propose retrospective cancellation.
  2. Whether the impugned order suffered from arbitrariness and violation of principles of natural justice.
  3. Whether the writ petition filed at a belated stage could be entertained. 

Petitioner’s Arguments

– The SCN did not propose retrospective cancellation, hence the impugned order cancelling the registration w.e.f. 29th September 2018 is unsustainable.
– The compensation for cancellation should run from the SCN date (2 February 2022), particularly where the business closed in 2021. 

Respondent’s Arguments

– The petition was belated given the order was passed in March 2022.
– However, no substantive ground was set out in the SCN proposing retrospective cancellation, and the respondent submitted on the legal position. 

Court’s Order / Findings

The Delhi High Court held:
 The SCN must contemplate retrospective cancellation for such relief to be valid.
 Absent such language, the GST cancellation order cannot be given retrospective effect.
 The petition, though belated, was entertained considering the dissolution of the firm and demise of a partner.
 Citing precedent and settled legal position, the Court directed that cancellation would be effective only from the SCN issuance date (2 February 2022), not retrospectively. 

Important Legal Clarification

Under Section 29(2) of the Central Goods and Services Tax Act, 2017, the proper officer may cancel registration from such date including any retrospective date, if circumstances warrant. However, retrospective effect of cancellation cannot be applied mechanically or absent explicit notice in the SCN. Precedents such as Akash Bansal (Proprietor M/s Shri Prem Ji Traders) and others were relied upon for this settled legal position. 

Sections Involved

  • Section 29(2), Central Goods and Services Tax Act, 2017 – Cancellation of GST registration.

Link to download the order -  https://delhihighcourt.nic.in/app/showFileJudgment/PMS08092025CW137472025_180842.pdf 

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