STBA Representation to Delhi Tax Department on cancellation of GSTN and processing of Refund Application

The Sales Tax Bar Association has issued a formal representation dated April 22, 2026, addressed to the Commissioner of State Tax/DGST, Department of Trade and Taxes, emphasising the issues faced by the taxpayers in relation to the GST registration cancellation and processing refund applications.

On the issue of cancellation of GST registration, the association referenced a recent order DTT-D011/33/2026-Policy-TT-/144 dated April 02, 2026, under which proper officers were assigned based on the limit of Rs 2.5 crore of Input Tax Credit (ITC) availed or passed on. Basically, if the taxpayer exceeds this threshold, prior approval of the higher authority, i.e., the concerned Zonal Incharge, is required to be obtained.

In this regard, the association has sought a key clarification on “whether the said limit of Rs. 2.5 crores ITC availed and/or passed on by the taxpayer is to be considered on an annual basis or cumulatively from the date of registration. “ It flagged that if this limit is on a cumulative basis, this may create hardship for small taxpayers, especially for those who have been registered since 2017 or in cases involving closure of business, death of proprietor, or financial distress where cancellation is sought for genuine reasons. Therefore, the association suggested that the limit should be based on an annual/yearly approach or relaxed in genuine cases.

The second key concern raised by the association was regarding the GST refund applications, which are presently handled at the zonal level rather than by jurisdictional officers. As per the association, this leads to a delay because the officers are not properly aware of the taxpayer’s background. Taxpayers are often required to visit multiple offices, and different officers may handle different refund claims of the same taxpayer, leading to repeated document submissions and inconsistent queries.

To resolve this issue, the association has recommended allocating refund cases to jurisdictional officers, making better digital coordination between officers, appointing a single officer for each taxpayer’s refunds, and introducing a transparent tracking system. It also suggested setting up time limits, facilitating faster processing.

At the end of the representation, the association urged the concerned authorities to shortly consider clarification and take action accordingly.