Retrospective GST Cancellation Set Aside; Registration Restored with Compliance Condition

By
Kirti Gupta
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Case Name: Mohd. Aksar Alam vs. The Commissioner, Delhi Goods and Services Tax & Anr.
Court: Delhi High Court
Petition Number: W.P.(C) 10264/2024
Category: GST Registration Cancellation
Date of Judgment: 29.08.2024
Relevant Sections:

  • Section 29 of the CGST Act, 2017

  • Rule 23(1) of CGST Rules, 2017

Facts of the Case [Para 1–8]

  1. The petitioner, Mohd. Aksar Alam, was issued GST registration on 17.07.2018 with retrospective effect from 01.07.2017. [Para 2]

  2. A show cause notice (SCN) dated 01.09.2021 was issued for non-filing of GST returns for six consecutive months. The petitioner’s registration was suspended simultaneously. [Para 3-4]

  3. The SCN neither provided a date/time for personal hearing nor mentioned any proposed retrospective effect of cancellation. [Para 4, 6]

  4. The registration was cancelled retrospectively from 01.07.2017 vide order dated 26.09.2021. [Para 5]

  5. The petitioner stated he had relied on an accountant who failed to file returns. Due to delayed knowledge, appeal time also lapsed. [Para 7]

  6. The petitioner accepted default in return filing but confirmed that no taxable supply was made post-suspension. [Para 8]

Question(s) in Consideration [Derived from Para 1, 6, 9]

  • Whether retrospective cancellation of GST registration from the date of registration, without prior notice or reasoning, is valid in law?

  • Can registration be restored in the interest of justice to enable compliance?

Observations of the Court [Para 6, 9, 10]

  1. The show cause notice did not propose retrospective cancellation, and the final order failed to justify such retrospective effect. [Para 6]

  2. The respondents fairly agreed to restore registration to allow return filing and payment of taxes. [Para 9]

  3. The Court acknowledged Rule 23(1) of CGST Rules, which provides 30 days to file returns post restoration. [Para 9]

Judgment of the Court [Para 10–14]

  1. The High Court set aside the impugned cancellation order dated 26.09.2021. [Para 10]

  2. Directed the GST authorities to restore the petitioner’s registration immediately. [Para 10]

  3. The petitioner must file all pending returns and pay taxes, interest, and penalties within 30 days. [Para 11]

  4. Failure to comply allows the department to cancel registration again without notice. [Para 12]

  5. Authorities are not barred from initiating statutory recovery or compliance proceedings. [Para 13]

  6. Petition was disposed of accordingly. [Para 14]

Between Fine Lines

This case reaffirms that retrospective cancellation of GST registration must be specifically proposed and reasoned in the show cause notice. The Delhi High Court restored the registration to provide the taxpayer a fair chance to comply, stressing that recovery and cancellation rights remain with the authorities if the taxpayer fails again.

Summary of Referred Cases

(No case laws were cited in the judgment by either party.)

Disclaimer – “The above summary is for academic purpose only; not formal legal opinion. Seek professional opinion before application. Author or publisher or website shall not be responsible for any usage in any form.”

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