Goyal Metal Industries , Proprietor Jai Prakash Gupta vs. Principal Commissiner Of GST, Department Of Trade And Taxes, New Delhi
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The petitioner, Goyal Metal Industries, sought to quash an order dated 28.07.2018 cancelling its GST registration retrospectively from 01.07.2017 and an order dated 11.12.2023 disposing of a show cause notice and raising a demand of Rs. 18,51,918.60. The petitioner argued it could not respond to the show cause notice as it could not access the GST portal, and was informed via an RTI query that its registration was cancelled retrospectively. The petitioner had applied for cancellation of registration effective from 01.01.2018, having ceased business on 31.12.2017 and filed returns till then. The respondent stated that the petitioner's records were not available on the portal, and while the cancellation date was reflected, the orders were inaccessible even to the proper officer.
Held
The Court held that the impugned order dated 11.12.2023, which disposed of the show cause notice and raised a demand against the petitioner, was not sustainable. The reasoning was that a retrospective cancellation of GST registration inherently prevents a taxpayer from accessing the portal, becoming aware of notices, or responding to them. In this case, the retrospective cancellation from 01.07.2017 meant the petitioner could not have received or responded to the show cause notice. The Court set aside the order dated 11.12.2023. Recognizing that both parties desired cancellation of registration, though for different effective dates, the Court deemed it in the interest of justice to cancel the petitioner's registration retrospectively from 01.01.2018, aligning with the petitioner's application date. The respondent was directed to serve a copy of the Section 73 show cause notice within one week, to which the petitioner would respond within two weeks. The Proper Officer was to adjudicate the notice after a personal hearing. The Court explicitly stated it had not commented on the merits of either party's contentions.
Key Issues
1. Whether the impugned order dated 11.12.2023, disposing of the show cause notice and raising a demand, is sustainable when the petitioner could not access the GST portal to respond due to retrospective cancellation of registration? (Question of law) Petitioner's arguments: The petitioner contended that the retrospective cancellation of its GST registration from 01.07.2017 prevented it from accessing the GST portal and responding to the show cause notice dated 27.07.2023. It argued that it had applied for cancellation of registration effective from 01.01.2018, as business operations ceased on 31.12.2017, and returns were filed up to that date. The petitioner relied on the principle that retrospective cancellation hinders a taxpayer's ability to participate in proceedings. Respondent's arguments: The respondent submitted that the petitioner's records were not available on the GST portal and that the cancellation order was not accessible. Without prejudice to its rights, the respondent had no objection to the GST registration being cancelled with effect from 01.01.2018.
Sections Cited
Section 73
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Cause title — parties, addresses and appearances
JUDGMENT SANJEEV SACHDEVA, J. (ORAL)
Petitioner seeks quashing of order dated 28.07.2018 whereby the GST registration has been cancelled retrospectively from 01.07.2017. Petitioner also impugns order dated 11.12.2023, whereby, the impugned Show Cause Notice dated 27.07.2023, proposing a demand against the Petitioner has been disposed and a demand of Rs. 18,51,918.60/- including penalty has been raised against the Petitioner. W.P.(C) 3632/2024 The order has been passed under Section 73 of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as the “Act”),
Learned counsel for the petitioner submits that petitioner could not respond to the Show Cause Notice dated 27.09.2023 as the petitioner could not access the GST portal. She submits that on a query raised under the Right to Information Act, petitioner was informed that the GST registration of the petitioner has been cancelled retrospectively with effect from 01.07.2017. 3. Learned counsel for the petitioner submits that petitioner had applied for cancellation of GST registration with effect from 01.01.2018 as petitioner had done business only till 31.12.2017 and has filed returns till that period.
Learned counsel for respondents submits that the record of the petitioner is not available on the GST portal. He submits that portal is reflecting that the registration has been cancelled retrospectively with effect from 01.07.2017, however, orders are not accessible even to the proper officer.
He submits that without prejudice to the right of the department to take action in case any infraction is found on the part of the petitioner, he has no objection in case GST registration of the petitioner is cancelled with effect from 01.01.2018. 6. We note that the impugned order dated 11.12.2023 has been passed merely on the ground that no reply has been received from the W.P.(C) 3632/2024 taxpayer.
It is not in dispute that once the registration is cancelled retrospectively, the taxpayer is not in a position to access the portal; become aware of any notice or respond thereto.
In the instant case, since the GST portal shows that the registration of the petitioner has been cancelled retrospectively with effect from 01.07.2017, petitioner would not have been able to receive the show cause notice or access the portal to become aware of any show cause notice or respond thereto.
In view of the above, we are of the view that impugned order dated 11.12.2023 is not sustainable. The same is accordingly set aside.
Since both the petitioner as well as respondent want the registration to be cancelled, though for different reasons, we are of the view that interest of justice requires that the registration of the petitioner be deemed to be cancelled with effect from 01.01.2018 i.e., the date of the application filed by the Petitioner seeking cancellation of the GST registration.
Further, Respondent shall serve a copy of the Show Cause Notice under Section 73 of the Act to the petitioner within a period of one week from today. Petitioner shall thereafter respond to the show cause notice within a period of two weeks. The Proper Officer shall adjudicate the show cause notice and pass a speaking order after giving an opportunity of personal hearing to the petitioner. W.P.(C) 3632/2024 12. It is clarified that this Court has neither considered nor commented upon the merits of the contentions of either party. All rights and contentions of parties are reserved.
Petition is accordingly disposed of in the above terms. SANJEEV SACHDEVA, J RAVINDER DUDEJA, J MARCH 13, 2024/vp
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.