Shobha Rani vs. Commissioner Of Delhi Goods And Service Tax & Anr.
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The petitioner, Shobha Rani, filed a writ petition challenging an order dated 22.06.2021 that cancelled her Goods and Services Tax Registration (GSTIN 07AJJPR3972L1ZI) retrospectively from 26.10.2017. The impugned order did not provide specific reasons for cancellation, merely referencing a Show Cause Notice (SCN) dated 08.02.2021. The SCN cited failure to file returns for six continuous months and called for a reply within seven working days, also stating the case would be decided ex parte if the petitioner failed to appear for a personal hearing. Crucially, the SCN did not mention retrospective cancellation, and no date or time for the personal hearing was specified. The petitioner's GST registration was suspended from the date of the SCN, 08.02.2021.
Held
The Court found merit in the petitioner's contention that their GST registration could not be cancelled retrospectively without affording them an opportunity to address the aspect of retrospective cancellation. The Court noted that the Show Cause Notice did not propose retrospective cancellation, and no date for personal hearing was provided, which prejudiced the petitioner's ability to respond to this specific consequence. While the respondent argued that Section 29(2) of the CGST Act empowers the Proper Officer to cancel registration with a retrospective date, they conceded that the matter should be remanded to the Proper Officer to consider the retrospective cancellation aspect after hearing the petitioner. The Court, considering the peculiar facts, including the delay in approaching the Court, accepted the respondent's submission. Consequently, the impugned order of cancellation was set aside, and the matter was remanded to the Proper Officer for fresh consideration. The petitioner was granted two weeks to file a reply to the SCN, and the Proper Officer was directed to consider the reply and make an informed decision after affording the petitioner an opportunity of being heard.
Key Issues
1. Whether the petitioner's GST registration could be cancelled retrospectively without affording an opportunity to address the aspect of retrospective cancellation, particularly when the Show Cause Notice did not propose such cancellation? (Question of law and mixed fact and law, turning on principles of natural justice and Section 29(2) of the CGST Act, 2017). Petitioner's Contention: The petitioner argued that their GST registration could not be cancelled retrospectively without a proper opportunity to be heard on this specific aspect, as the SCN did not propose retrospective cancellation. They stated they had no objection to the cancellation of their registration prospectively but contested the retrospective effect, asserting no plausible reason existed for it during periods when returns were duly filed. Respondent's Contention: The respondent, represented by the Commissioner of Delhi Goods and Services Tax & Anr., argued that the Proper Officer is empowered under Section 29(2) of the CGST Act, 2017, to cancel registration with a date considered fit. They submitted that it would not be appropriate for the Court to decide the retrospective cancellation issue and proposed remanding the matter to the Proper Officer to consider this aspect after hearing the petitioner.
Sections Cited
Section 29(2)
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W.P. (C) 10034/2024 $~74 * IN THE HIGH COURT OF DELHI AT NEW DELHI
%
Date of Decision : 23.07.2024
+ W.P.(C) 10034/2024 and CM APPL. 41035/2024
SHOBHA RANI .....Petitioner Through: Mr.Rajesh Mahna, Mr.Ramanand Roy, Mr.Mithlesh Tiwari and Mr.Mayank Routs, Advocates.
versus
COMMISSIONER OF DELHI GOODS AND SERVICES TAX & ANR. .....Respondents Through: Mr.Udit Malik, ASC and Mr.Vishal Chanda, Advocate. 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 22.06.2021 (hereafter the impugned order) whereby the petitioner’s Goods and Services Tax Registration – Goods and Service Tax Identification Number (GSTIN) 07AJJPR3972L1ZI – was cancelled with retrospective effect from 26.10.2017. 2. The impugned order does not indicate any reason for cancelling the petitioner’s GST registration except referring to the Show Cause Notice dated 08.02.2021 (hereafter the impugned SCN).
The petitioner was issued the impugned SCN and called upon the W.P. (C) 10034/2024 petitioner to show case as to why its GST registration be not cancelled on the failure to file the returns for continuous period of six months. The petitioner was called upon to file the reply to the impugned SCN within the period of seven working days. The petitioner was also put to notice that if the petitioner did not appear for personal hearing on the appointed date and time, the case would be decided ex parte. Additionally, the petitioner’s GST registration was suspended from the date of the impugned SCN – 08.02.2021. 4. It is material to note that the impugned SCN did not propose cancellation of the petitioner’s GST registration with retrospective effect. Although, the petitioner was put to notice that in case the petitioner failed to appear for personal hearing at the appointed date and time, the case would be decided ex parte. However, no date or time for personal hearing was mentioned in the impugned SCN.
In view of the above, we find merit in the contention of the petitioner that the petitioner’s GST registration could not have been cancelled without affording the petitioner an opportunity of personal hearing to address the aspect of cancellation of GST registration with retrospective effect.
Mr. Mahana, learned counsel appearing on behalf of the petitioner, states on instructions, that the petitioner has no objection if the petitioner’s registration remains cancelled, and the present petition be confined to the question of cancellation with the retrospective effect. He submits that there is no plausible reason to cancel the petitioner’s registration to cover the period during which the returns were duly filed by the petitioner.
W.P. (C) 10034/2024 7. The learned counsel for the respondent states that it would not be apposite for this Court to decide the question of retrospective cancellation as the Proper Officer is duly empowered under Section 29(2) of the Central Goods and Services Tax Act, 2017 to cancel the registration with such date as he considers fit. He submits that the matter may remanded to the Proper Officer to consider this aspect of cancellation of GST registration of the petitioner after hearing the petitioner.
In the peculiar facts of this case including the delay on the part of the petitioner to approach this Court, the submission made by the learned counsel for the respondent commends to this Court.
In view of the above, the impugned order is set aside and the matter is remanded to the Proper Officer for consideration afresh. The petitioner may file its reply to the impugned SCN within the period of two weeks from date. The Proper Officer will consider the reply of the petitioner and take an informed decision after affording an opportunity of being heard to the petitioner.
The petition stands disposed of in the aforesaid terms. Pending application also stands disposed of. VIBHU BAKHRU, J
SACHIN DATTA, J JULY 23, 2024 M
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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.