M/S Hari Om Chemicals vs. Principal Commissioner Of Goods And Service Tax North Delhi
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The petitioner, M/s Hari Om Chemicals, sought permission from the Delhi High Court to cancel its GST registration. The petitioner, registered since July 1, 2017, claims to have discontinued its business of trading in polymers of vinyl chloride. An application for cancellation was filed on June 25, 2024, followed by a notice from the proper officer seeking reasons. The petitioner did not respond, leading to the rejection of its application on July 2, 2024. A subsequent application on July 11, 2024, explicitly stating "Discontinuance of business/Closure of business" as the reason, also received no response. The petitioner filed a writ petition seeking intervention.
Held
The Court held that the petitioner's application for cancellation of GST registration, based on the stated reason of discontinuance of business, is required to be processed. The Court reasoned that Rule 22(3) of the Central Goods and Services Tax Rules, 2017, mandates the cancellation of registration if a person is no longer liable to be registered. Since the petitioner has clearly stated that it has closed its business, it is no longer liable for GST registration. The Court directed the respondents to process the petitioner's application for cancellation. It was clarified that the cancellation would not absolve the petitioner of any pre-cancellation liabilities or affect the respondent's right to initiate proceedings for statutory violations prior to the cancellation date.
Key Issues
1. Whether the petitioner's application for cancellation of GST registration, based on discontinuance of business, is required to be processed by the proper officer under the Central Goods and Services Tax Rules, 2017? The petitioner argued that it has unequivocally stated the discontinuance of its business and that a person not carrying on business is not liable to be registered under GST. Therefore, its application for cancellation should be processed. The respondent (Principal Commissioner of GST) submitted that in terms of Rule 22(3) of the Central Goods and Services Tax Rules, 2017, the proper officer is required to cancel the registration if the person is no longer liable to be registered, and that the proper officer must examine this issue.
Sections Cited
Rule 22(3)
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Cause title — parties, addresses and appearances
O R D E R
Issue notice.
Learned counsel for the respondent accepts notice.
The petitioner has filed the present petition, inter-alia, praying that permission be issued to the respondent to cancel the petitioner’s GST registration.
The petitioner was registered with the GST authorities with effect from 01.07.2017 and was assigned Goods and Service Tax Identification No:07ACXPG2335F1ZK.
The petitioner claims that he was engaged in the business of trading in polymers of vinyl chloride and has since discontinued his business. Consequently, by an application dated 25.06.2024, he had applied for cancellation of GST registration. Thereafter, the proper officer issued a notice dated 26.06.2024 seeking for additional information including 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 02/08/2024 at 11:38:31
reasons for seeking cancellation.
It appears that the petitioner did not respond to the said notice and consequently the petitioner’s application for cancellation of his registration was rejected by an order dated 02.07.2024. The petitioner has again applied for cancellation of its GST registration by an application dated 11.07.2024, clearly setting out its reasons for seeking cancellation as “Discontinuance of business/Closure of business”. However, the petitioner has not received any response to his application.
Learned counsel for the respondent submits that in terms of Rule 22 (3) of the Central Goods and Services Tax Rules, 2017 the proper officer is required to cancel the registration if the person is no longer liable to be registered. He submits that the proper officer is thus, required to examine the said issue.
In the present case, the petitioner has unequivocally stated that he has discontinued his business. Clearly, a person who has closed his business is not required to be registered and thus, his GST registration is required to be cancelled.
Since the petitioner is not carrying on his business, his application for cancellation of his GST registration is required to be processed.
In view of the above, we direct the respondents to process the petitioner’s application for cancellation of GST registration.
It is clarified that the cancellation of the petitioner’s GST registration would not absolve the petitioner of any liability for payment of tax or other dues and for failure to comply with the statutory provisions prior to the date of cancellation.
The respondent’s right to initiate appropriate proceedings, if 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 02/08/2024 at 11:38:31
necessary, on account of any statutory violation on the part of the petitioner will also not be affected by cancellation of the petitioner’s GST registration.
The petition is allowed in the above terms.
VIBHU BAKHRU, J
SACHIN DATTA, J JULY 25, 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 02/08/2024 at 11:38:31
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.