Mohd. Aksar Alam vs. The Commissioner, Delhi Goods And Services Tax & Anr.
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The petitioner, Mohd. Aksar Alam, challenges an order dated 26.09.2021 cancelling his GST registration retrospectively from 01.07.2017. The petitioner was registered on 17.07.2018 with effect from 01.07.2017. A Show Cause Notice (SCN) was issued on 01.09.2021 for non-filing of returns for six continuous months, suspending the registration from the same date. The SCN did not specify a personal hearing date. The cancellation order, however, was retrospective from the date of grant of registration and did not provide reasons for this retrospective cancellation. The petitioner attributed the non-filing to an accountant and stated that by the time he became aware of the cancellation, the appeal period had lapsed. He acknowledged non-filing and non-payment but stated no taxable activity occurred post-suspension.
Held
The Court held that the retrospective cancellation of the petitioner's GST registration was not justified. The Court noted that the Show Cause Notice (SCN) did not propose retrospective cancellation, and the cancellation order itself failed to provide any reasons for such retrospective effect. This lack of proper notice and reasoning violated principles of natural justice. The respondents' counsel conceded that the registration could be restored to allow the petitioner to file returns and pay dues. Consequently, the Court set aside the impugned cancellation order and directed the restoration of the petitioner's GST registration forthwith. The petitioner was directed to file all pending returns and pay due taxes, along with interest and penalty, within thirty days. The Court clarified that failure to comply would allow the respondents to cancel the registration without further notice and to initiate proceedings for statutory non-compliance or recovery of dues.
Key Issues
1. Whether the retrospective cancellation of GST registration, from the date of grant (01.07.2017) to the date of the cancellation order (26.09.2021), is valid when the Show Cause Notice (SCN) only proposed cancellation for continuous non-filing of returns and did not mention retrospective cancellation, and the cancellation order itself lacked reasons for such retrospective effect, thereby violating principles of natural justice and statutory provisions? Petitioner's Arguments: The petitioner argued that the retrospective cancellation was arbitrary and without basis, as the SCN did not propose it, and the cancellation order failed to provide any reasons for this retrospective action. The petitioner also stated that the SCN did not specify a date for personal hearing, further violating procedural fairness. Revenue's Arguments: The learned counsel for the respondents fairly stated that the petitioner's GST registration could be restored to enable him to file his returns and pay taxes. He referred to proviso (4) of Rule 23(1) of the Central Goods and Services Tax Rules, 2017, which allows a taxpayer thirty days to file returns upon revocation of cancellation.
Sections Cited
Rule 23(1)
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Cause title — parties, addresses and appearances
O R D E R % 29.08.2024
The petitioner has filed the present petition, inter-alia, impugning an order dated 26.09.2021 (hereafter the impugned cancellation order), whereby the petitioner’s GST registration was cancelled with retrospective effect from 01.07.2017. 2. The petitioner was registered under the Central Goods and Services Tax Act, 2017 (CGST Act)/Delhi Goods and Services Tax Act, 2017 (DGST Act) on 17.07.2018 but with effect from 01.07.2017. 3. On 01.09.2021, the petitioner was issued a Show Cause Notice (hereafter the impugned SCN) calling upon the petitioner to show cause why its GST registration not be cancelled for the reason that the petitioner had not filed its returns for a continuous period of six months.
The petitioner was called upon to furnish a reply to the impugned This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 07/09/2024 at 14:34:21 SCN within a period of seven working days. Additionally, the petitioner’s GST registration was suspended with effect from 01.09.2021. The petitioner was put to notice that in the event he fails to file a reply within the stipulated period or failed to appear for personal hearing on the appointed date and time, the case would be decided ex-parte on the basis of the available records. However, the impugned SCN did not specify any date or time for the personal hearing.
The petitioner’s GST registration was cancelled with retrospective effect from 01.07.2017 – that is from the date it was granted – in terms of the impugned cancellation order.
The impugned SCN did not propose any action of retrospective cancellation of the petitioner’s GST registration. The impugned cancellation order also does not set out any reasons for any such retrospective cancellation of petitioner’s GST registration.
It is the petitioner’s case that he engaged an accountant to file its GST returns but the said accountant had failed to do so. The petitioner states that by the time he became aware that his GST registration was cancelled, the time period for filing the appeal had also lapsed.
The petitioner acknowledges that he had defaulted in filing the returns and not paid the dues. The petitioner also states that after the suspension of his GST registration, the petitioner has not carried on any taxable activity.
Mr. Aggarwal, the learned counsel for the respondents fairly states that the petitioner’s GST registration may be restored to enable him to file his returns and pay the taxes. He also referred to the proviso (4) of Rule 23(1) of the Central Goods and Services Tax Rules, 2017, which provides for a period of thirty days for a tax payer to file his returns in case the order This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 07/09/2024 at 14:34:21 cancelling its registration is revoked.
In view of the above, we consider it apposite to set aside the impugned cancellation order and direct that the petitioner’s GST registration be restored forthwith.
The petitioner is bound down to his statement that he will file his returns up to date and pay the taxes due along with interest and penalty, if any, within the stipulated period of thirty days.
It is clarified that if the petitioner fails to do so, the respondents are not precluded from cancelling the petitioner’s GST registration without further notice.
It is also clarified that the respondents are not precluded from initiating such proceedings as may be warranted for statutory non- compliance or for recovery of any dues.
The petition is disposed of in the aforesaid terms. VIBHU BAKHRU, J SACHIN DATTA, J AUGUST 29, 2024/cl This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 07/09/2024 at 14:34:21
Reproduced from the public record of the Delhi High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.