GST Registration cannot be canceled retrospectively if Taxpayer has stopped doing business: HC:

GST Registration cannot be canceled retrospectively if Taxpayer has stopped doing business: HC The Delhi High Court in the matter of Aditya Polymers Through its proprietor Mr. Shweta Bhatia Versus Commissioner of Delhi Goods and Services Tax and another has held that GST Registration cannot be canceled retrospectively if Taxpayer has stopped doing business. It can be canceled w.e.f. date from which Taxpayer has stopped doing business. The learned counsel appearing for the petitioner states that the petitioner stopped carrying on business from her principal place of business in Delhi and therefore, had not filed any returns. The petitioner is not aggrieved by the cancellation of its GST registration and states that in any event her GST registration was required to be cancelled on account of her discontinuing its business and shifting to Kanpur. The petitioner is essentially aggrieved on account of the cancellation of its registration with retrospective effect. In terms of Section 29(2) of the CGST Act, the proper officer is empowered to cancel the registration from any such date as he may deem fit including from any retrospective date. However, selecting a date from which to cancel the registration cannot be arbitrary. It is essential that the exercise of powers to cancel the registration ab initio, must be based on material on record and some rationale. Further, the taxable person must be put to notice of the proposed action to cancel the registration from a retrospective date so as to provide an opportunity to the said person to show cause why such cancellation should not be from a retrospective date. In the present case, the show cause notice issued to the petitioner did not mention that the proper officer proposed to cancel the registration with retrospective effect. Thus, the petitioner had no opportunity to address any proposed action of cancellation of registration ab initio. The learned counsel appearing for the petitioner submits that the petitioner would have no objection if the order cancelling the petitioner’s GST registration is sustained albeit with effect from 11.12.2020 (the date of the show cause notice) instead from 01.07.2017, that is from the date when such registration was granted. The learned counsel appearing for the respondents is also agreeable to the same. In view of the above, the present petition is disposed of with the direction that the cancellation of the petitioner’s GST registration would take effect from 11.12.2020 and not from 01.07.2017. For Official Judgment Download PDF Given Below: