Desk of CA Praveen Sharma – 928 Series (CAPS)

Delhi High Court in the case of GLO Interio

The Delhi High Court recently examined the legality of retrospective cancellation of GST registration in the case of GLO Interio. The petitioner had obtained GST registration in June 2019 and later applied for voluntary cancellation after discontinuing business activities, as permitted under Section 29 of the GST Act.

A show cause notice was issued in January 2021 alleging non-payment of GST dues and proposing cancellation of registration. However, the notice did not specify the period of default, the amount of tax involved, or the effective date from which cancellation was proposed. As no reply was filed, the department cancelled the GST registration retrospectively from the date of grant through Form GST REG-19.

The petitioner challenged the cancellation before the appellate authority, contending that the notice was vague and possibly not served. The appeal, however, was dismissed as time-barred by a brief, non-speaking order. Aggrieved, the petitioner approached the High Court.

The Court held that although Section 29 permits retrospective cancellation, such power must be exercised only after issuing a clear and reasoned show cause notice. A vague notice lacking essential details was held to violate principles of natural justice and Article 14 of the Constitution. The Court also found fault with the appellate authority for rejecting the appeal on limitation without examining the serious procedural lapses.

Accordingly, both the cancellation order and the appellate order were set aside. The department was allowed to issue a fresh, detailed show cause notice. However, considering the delay on the petitioner’s part, the Court imposed a cost of ?10,000 payable to the Delhi High Court Bar Association as a condition for further proceedings.

Link: CA. Praveen Sharma on Linkedin

Regards
CAPS