Facts of the Case

The Petitioner, a registered entity under GST since 11.09.2017, ceased business operations in March 2022 and intended to cancel its GST registration. Subsequently, a Show Cause Notice (SCN) dated 24.05.2022 was issued citing vague non-compliance under GST provisions.

The Petitioner did not respond to the SCN, allegedly due to lack of access and non-receipt, as communications were linked to its Chartered Accountant. Thereafter, GST registration was cancelled vide order dated 10.06.2022 with retrospective effect from 11.09.2017.

The Petitioner challenged only the retrospective cancellation, not the cancellation itself. 

Issues Involved

  1. Whether GST registration can be cancelled retrospectively without specific mention in the Show Cause Notice.
  2. Whether cancellation based on grounds not stated in the SCN violates principles of natural justice.
  3. Whether retrospective cancellation is justified when business cessation occurred at a later date. 

Petitioner’s Arguments

  • The SCN was vague and non-specific, providing no clear grounds.
  • Grounds cited in the final cancellation order were different from those in the SCN, violating due process.
  • No opportunity was provided to respond to actual allegations.
  • Retrospective cancellation from 2017 was arbitrary, especially when business ceased only in March 2022.
  • The Petitioner sought modification of the effective date of cancellation.

Respondent’s Arguments

  • The Petitioner failed to respond to the SCN and did not attend the personal hearing.
  • Non-compliance included failure to update bank details and submit required documents under Rule 10A.
  • However, during hearing, the Respondents did not object to modifying the cancellation date to the date of SCN (24.05.2022). 

Court’s Findings / Order

  • The Court observed that:
    • The grounds in the cancellation order differed from the SCN, which is impermissible.
    • The SCN did not propose retrospective cancellation.
    • The Petitioner was denied a fair opportunity to respond.
  • Order:
    • Retrospective cancellation from 11.09.2017 was set aside.
    • GST registration cancellation held effective from 24.05.2022 (date of SCN/suspension).
    • Impugned order modified accordingly.

Important Clarifications by Court

  • The judgment does not prevent authorities from:
    • Initiating proceedings for statutory violations.
    • Recovering any dues in accordance with law.

Link to download the order -  https://delhihighcourt.nic.in/app/showFileJudgment/VIB12092024CW119132024_182159.pdf 

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