Facts of the Case

The petitioner, Rakesh Kumar Garg, filed a writ petition seeking enforcement of an appellate order dated 5th April 2021. The petitioner had applied for voluntary cancellation of GST registration (GSTIN) due to deteriorating health and inability to continue business.

However, instead of accepting the request, the department passed an order dated 15th September 2020 cancelling the GSTIN suo moto under Section 29(2) of the CGST Act with retrospective effect from the date of registration (1st July 2017).

Subsequently, the appellate authority set aside the said order and directed cancellation of GST registration from the date of application i.e., 4th March 2020. Despite this, the respondent authority failed to fully comply with the appellate order, leading to the present writ petition.

Issues Involved

  1. Whether the GST authorities can override a taxpayer’s request for voluntary cancellation and instead invoke Section 29(2) for suo moto cancellation.
  2. Whether the department is bound to strictly comply with appellate authority orders.
  3. What should be the effective date of GST cancellation—date of application or date of departmental action. 

Petitioner’s Arguments

  • The petitioner sought cancellation due to genuine reasons (health issues).
  • The department acted arbitrarily by cancelling GST registration retrospectively under Section 29(2).
  • The appellate authority had clearly allowed cancellation from 04.03.2020, but the same was not properly implemented.
  • Partial compliance by the department defeats the purpose of appellate relief.

Respondent’s Arguments

  • The respondent contended that the petitioner had not challenged certain earlier orders.
  • It was argued that the department exercised its powers validly under the Act.
  • The department attempted to justify its action based on prior orders rejecting cancellation applications.

Court’s Findings / Judgment

The Delhi High Court held:

  • The appellate authority had passed a clear, reasoned, and binding order allowing cancellation from the date of application.
  • The petitioner had the right to discontinue business voluntarily.
  • The department’s reliance on earlier orders was misconceived and unsustainable.
  • Authorities cannot partially comply with appellate orders.

Final Order

  • The writ petition was allowed.
  • The respondent authority was directed to fully comply with the appellate order dated 5th April 2021.
  • GST registration was to be treated as cancelled w.e.f. 4th March 2020 (date of application).

Important Clarification

  • Voluntary cancellation of GST registration cannot be substituted by arbitrary suo moto cancellation under Section 29(2).
  • Appellate orders are binding and must be implemented in letter and spirit.
  • The effective date of cancellation must align with the taxpayer’s application, if allowed by the appellate authority.

Sections Involved

  • Section 29(2), Central Goods and Services Tax Act, 2017 – Cancellation of registration by proper officer

Link to download the order -  https://delhihighcourt.nic.in/app/case_number_pdf/2022:DHC:475-DB/MMH04022022CW21882022_225554.pdf

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