Mona Jain (Prop. M/S Universal Metal Traders) vs. Suprintendent Range-122, Central Goods And Services Tax, Delhi West

Held

The Court allowed the writ petition, quashing the final order dated October 10, 2024, to the extent it recorded the cancellation of registration from October 22, 2023. The Court reasoned that the original SCN dated September 10, 2024, did not provide any indication of the respondents' intent to cancel the registration retrospectively. This failure to notify the petitioner of the possibility of retrospective cancellation violated the principles of natural justice, as the petitioner was not afforded an opportunity to address this specific aspect. The Court relied on its previous judgments, particularly Riddhi Siddhi Enterprises, which held that retrospective cancellation requires clear reasoning and must be indicated in the SCN. The Court found an "abject failure" on the part of the authority to assign rudimentary reasons for the retroactive cancellation. Consequently, the cancellation of registration was ordered to be effective from the date of the original SCN, i.e., September 10, 2024. The Court did not expressly leave any issue undecided.

Facts

The petitioner, Mona Jain (Prop. M/s Universal Metal Traders), challenged the retrospective cancellation of her GST registration. The petitioner contended that the original Show Cause Notice (SCN) dated September 10, 2024, did not indicate any intention by the respondents to cancel the registration retrospectively. The SCN alleged that the petitioner was not carrying on business from the declared place, contravening Rule 21(a) of the Central Goods and Services Rules, 2017. This reason was adopted in the final cancellation order dated October 10, 2024. The petitioner argued that the lack of prior notice regarding retrospective cancellation rendered the action unsustainable.

Key Issues

1. Whether the retrospective cancellation of GST registration is sustainable when the original Show Cause Notice did not indicate such an intent, thereby violating the principles of natural justice and due process, specifically concerning Section 29(2) of the Central Goods and Services Tax Act, 2017 and Rule 21(a) of the Central Goods and Services Rules, 2017? Petitioner's Contention: The petitioner argued that the retrospective cancellation of registration is unsustainable because the original SCN, dated September 10, 2024, failed to mention any intention to cancel the registration from a retrospective date. This lack of notice deprived the petitioner of an opportunity to object to the retrospective nature of the cancellation. The petitioner relied on the High Court's own previous decisions in Riddhi Siddhi Enterprises vs. Commissioner of Goods and Services Tax and Ramesh Chander vs. Assistant Commissioner of Goods and Services Tax, which emphasized the need for reasoned orders and clear indication of retrospective cancellation in the SCN. Respondent's Contention: The judgment does not record any specific arguments made by the respondent in defense of the retrospective cancellation.