Retrospective GST Cancellation and ITC Reversal Set Aside

Case Title: Ashish Singhal Proprietor APN Trading Co. v. Pr. Commissioner of Delhi GST & Ors.
Court: High Court of Delhi at New Delhi
Petition No.: W.P.(C) 6917/2024 & CM Appl. 28773/2024
Date of Judgement: 23rd April, 2025
Coram: Justice Prathiba M. Singh, Justice Rajneesh Kumar Gupta
Category of Dispute: Input Tax Credit (ITC) reversal due to retrospective cancellation of supplier’s registration
Relevant Sections: Section 73 & Section 168A, CGST/ DGST Act, 2017; Rules relating to SCN and ITC
Impugned Notifications: 9/2023-Central Tax (31.03.2023), 56/2023-Central Tax (28.12.2023)

Facts of the Case (Paras 2, 3, 6, 7, 8)

• The Petitioner challenged (i) SCN dated 04.12.2023 and (ii) adjudication order dated 13.04.2024 under Section 73 of CGST/DGST Act (Para 2).

• He also challenged Notification Nos. 9/2023 and 56/2023 extending limitation periods, arguing improper recommendation under Section 168A (Para 3).

• The demand of ₹4.34 crore was raised against the Petitioner by reversing ITC on purchases from M/s Essar Foods & Commodities, whose registration was cancelled retrospectively w.e.f. 30.11.2017 (Paras 6, 7).

• The supplier’s cancellation was later set aside by the Delhi High Court in W.P.(C) 4826/2024 (16.10.2024), holding retrospective cancellation illegal (Para 8).

Questions in Consideration (Paras 4, 5, 6, 7, 9)

1. Whether the impugned Notifications (Nos. 9/2023 & 56/2023) were validly issued under Section 168A without prior GST Council recommendation.

2. Whether the ITC reversal against the Petitioner can survive when the supplier’s registration cancellation has been quashed.

3. Whether the Petitioner was denied natural justice, as proceedings were ex-parte.

Observation of Court (Paras 4–10, 14)

• Various High Courts have given conflicting views on validity of the Notifications; the issue is pending before the Supreme Court in SLP No. 4240/2025 (M/s HCC-SEW-MEIL-AAG JV v. ACST) (Paras 4–7).

• Since the supplier’s cancellation has already been quashed, the Petitioner’s liability cannot be sustained without fresh adjudication (Para 8).

• Ex-parte orders with huge demands and penalties require reconsideration, ensuring opportunity of reply and personal hearing (Paras 9–10).

• The Court clarified that the validity of Notifications is left open, subject to Supreme Court’s decision (Para 14).

Judgement of Court (Paras 10–15)

• The impugned order dated 13.04.2024 was set aside.

• The matter was remanded to the adjudicating authority for fresh hearing (Para 10).

• Petitioner allowed to file fresh reply within 30 days (Para 11).

• Adjudicating authority directed to grant personal hearing and portal access for compliance (Paras 12–13).

• Any fresh order shall remain subject to Supreme Court’s outcome on Notification validity (Para 14).

Between Fine Lines (Simple 5-Line Summary)

• ITC was denied to the Petitioner due to retrospective cancellation of his supplier’s GST registration.

• That cancellation itself was quashed by the Delhi High Court earlier.

• Therefore, the demand of ₹4.34 crore against the Petitioner was unsustainable.

• The High Court set aside the ex-parte order and sent the case back for fresh adjudication.

• The issue of extension Notifications remains pending before the Supreme Court.

Summary of Referred Cases

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