Delhi High Court Asserts: GST Registration Cannot be Retrospectively Cancelled Based Solely on Non-Filing of Returns

In a recent judgment, the Delhi High Court disposed of a petition challenging the retrospective cancellation of GST registration of the petitioner. The court emphasized that mere non-filing of returns for a period does not warrant retrospective cancellation of GST registration for the period when returns were filed.

Case Background: The petitioner received a show cause notice regarding the cancellation of GST registration due to non-filing of returns for a continuous period of six months. Subsequently, the registration was cancelled retrospectively from July 15, 2017. The petitioner filed an application seeking revocation of the cancellation, which was rejected. Dissatisfied with the decision, the petitioner approached the High Court.

Petitioner’s Contentions: The petitioner, represented by their counsel, argued that they had ceased business activities due to health reasons and were no longer interested in continuing the business.

Court’s Observations: The court noted that both the show cause notice and the impugned order lacked necessary details and reasons for retrospective cancellation. It emphasized that cancellation of GST registration cannot be arbitrary and must be based on objective criteria set out in Section 29(2) of the GST Act.

The court further clarified that registration cannot be retrospectively cancelled solely because returns were not filed for a certain period. Retrospective cancellation should be based on valid grounds and not merely for non-filing of returns.

Court’s Decision: The Delhi High Court modified the impugned order, directing that the registration be treated as cancelled from the date of issuance of the show cause notice, i.e., February 3, 2021. The court dismissed the petition while issuing this modification.

Case Details:

• Case Title: Bijender Thakur v Commissioner of GST & Ors.
• Coram: Hon’ble Justice Sanjeev Sachdeva and Hon’ble Justice Ravinder Dudeja
• Case No.: W.P.(C) 3381/2024
• Advocate for the Petitioner: Mr. Prince Mohan Sinha, Mr. Dinesh Mohan Sinha, Mr. Maneesh Jain, and Mr. Rajeev Deora
• Advocate for the Respondents: Mr. Rajeev Aggarwal and Ms. Samridhi Vats
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