M/S Star Enterprises Through Its Proprietor Sh. Harsh vs. Commissioner Of Delhi GST And Anr.
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The petitioner, M/s Star Enterprises, filed a writ petition challenging an order dated January 20, 2022, which cancelled its GST registration retrospectively from July 17, 2021. The cancellation was based on a Show Cause Notice (SCN) dated December 21, 2021, which alluded to provisions for filing returns under Section 39 of the CGST Act and details of outward supplies, but did not explicitly state non-compliance or discrepancies. The SCN also mentioned non-compliance with law and the petitioner not functioning at the time of a field visit. The petitioner claims to have filed a belated reply, explaining absence due to business travel and requesting re-verification. The impugned order did not record any reasons for rejecting the petitioner's explanation or for the retrospective cancellation. The petitioner stated they were not aggrieved by the cancellation itself but by its retrospective effect, and had already filed returns. The respondents had no objection to modifying the order to make the cancellation prospective from the date of the SCN.
Held
The Court held that the impugned order cancelling the petitioner's GST registration would be operative prospectively from December 21, 2021, instead of the originally stated July 17, 2021. This decision was based on the consensus reached between the petitioner and the respondents. The respondents had no objection to this modification, and the petitioner's counsel concurred. The Court modified the impugned order to this extent. The Court clarified that this modification would not prevent the concerned authorities from initiating any action warranted by law, including retrospective cancellation if deemed necessary by the proper officer. The petition was disposed of in terms of this modification.
Key Issues
1. Whether the cancellation of the petitioner's GST registration with retrospective effect from July 17, 2021, was justified, considering the SCN and the subsequent order, and which provisions of law are relevant (CGST Act, Section 39)? Petitioner's arguments: The petitioner contended that while they were not aggrieved by the cancellation of their GST registration as they had closed their business, they were aggrieved by the retrospective effect. They also stated that they had filed their returns belatedly and requested a fresh physical verification of their business premises. The SCN did not propose retrospective cancellation, and the impugned order failed to provide reasons for this retrospective effect or for rejecting their explanation. Respondents' arguments: The respondents, through their counsel, stated they had no objection to modifying the impugned order to make the cancellation of the petitioner's registration prospective from the date of the SCN, i.e., December 21, 2021, as the petitioner's GST registration was suspended from that date.
Sections Cited
Section 39
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
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Date of Decision: 12.08.2024 + M/S STAR ENTERPRISES THROUGH ITS PROPRIETOR SH. HARSH
.....Petitioner Through: Mr. Vineet Bhatia, Mr. Bipin Punia, Ms. Aamnaya Jagannath Mishra and Mr. Keshav Garg, Advs.
versus
COMMISSIONER OF DELHI GST AND ANR. .....Respondents Through: Mr. Rajeev Aggarwal, ASC and Mr. Shubham Goel, Adv. CORAM: HON'BLE MR. JUSTICE VIBHU BAKHRU HON'BLE Mr. JUSTICE SACHIN DATTA
VIBHU BAKHRU, J. (Oral)
The petitioner has filed the present petition impugning an order dated 20.01.2022 (hereafter the impugned order), whereby the petitioner’s Goods and Services Tax (GST) registration was cancelled with retrospective effect.
The petitioner was registered under the Central Goods and Services Tax Act, 2017 (hereafter the CGST Act) and was assigned the Goods and Services Tax Identification Number (GSTIN) 07AJPPH0815A1ZP.
The petitioner was issued a Show Cause Notice dated 21.12.2021 (hereafter the SCN), whereby the petitioner was called W.P.(C) 10986/2024 upon to show cause why its registration not be cancelled. The reasons set out in the SCN allude to the provisions to file returns under Section 39 of the CGST Act and the details of outward supplies furnished by the petitioner in Form GSTR-1. However, it does not contain any allegation that the said provisions were not complied with or any discrepancy was foundin the returns furnished by the petitioner in Form GSTR-1. The reasons simply mention the returns furnished by the petitioner under Section 39 of the CGST Act and details of the outwards supplies furnished by the petitioner in Form GSTR-1. However, the SCN also alleged that the petitioner had not complied with the provisions of law and was not found functioning at the time of field visit.
The petitioner was called upon to respond to the SCN within a period of 30 days from the date of the SCN and was also directed to appear before the concerned proper officer on 23.12.2021. 5. Thereafter, the petitioner’s GST registration was cancelled by the impugned order. The impugned order does not mention any reason for cancelling the petitioner’s GST registration but merely states that the same is in reference to the SCN and that the petitioner did not appear on the date fixed for hearing. The tabular statement set out in the impugned order indicates that no tax or other dues were determined as payable by the petitioner.
The petitioner claims that he filed the reply to the SCN belatedly stating that he was not available at the time of field visit as he was travelling outside Delhi for business. He also requested that the physical verification of his place of business be conducted once again. The impugned order does not indicate that the explanations furnished by the petitioner were considered; as stated above, no reasonsare provided for rejecting the same.
It is also important to note that the impugned order cancels the petitioner’s GST registration with retrospective effect from 17.07.2021. However, the SCN does not mention any such proposed action. More importantly, the impugned order also does not reflect any reason for the same.
The learned counsel appearing for the petitioner submits that the petitioner has since closed down his business and is not aggrieved by cancellation of his GST registration. He is, however, aggrieved by cancellation of his registration being operative retrospectively. He also states that the petitioner has already filed his returns belatedly.
Mr. Aggarwal, learned counsel appearing for the respondents states that he has no objection if the impugned order is modified to effect that the cancellation of the petitioner’s registration be made prospectively from the date of the SCN as the petitioner’s GST was suspended from the date of issuance of the SCN – with effect from 21.12.2021. 10. The learned counsel for the petitioner concurs with the said submissions.
In view of the above, we direct that the impugned order cancelling the petitioner’s GST registration would be operative with effect from 21.12.2021 and not with effect from 17.07.2021. The impugned order is modified to the aforesaid extent.
It is clarified that this would not preclude the concerned authorities from initiating any action, if so warranted, in accordance with law. This will also include the cancellation of the petitioner’s GST registration with the retrospective effect, if the proper officer considers it necessary.
The present petition is disposed of in the aforesaid terms.
VIBHU BAKHRU, J
SACHIN DATTA, J AUGUST 12, 2024/cl
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.