Full Judgement
Delhi High Court
Raj Kumar Kukreja vs Principal Commissioner Delhi Goods And ... on 22 February, 2024
Author: Sanjeev Sachdeva
Bench: Sanjeev Sachdeva
$~19
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Judgment delivered on: 22.02.2024
+ W.P.(C) 1361/2024
RAJ KUMAR KUKREJA ..... Petitioner
versus
PRINCIPAL COMMISSIONER DELHI GOODS AND SERVICE TAX
AND ANR ..... Respondents
Advocates who appeared in this case:
For the Petitioner Mr. A.K. Babbar, Mr. Surendra Kumar and Mr. Bharat
Tirpathi, Advocates.
For the Respondents: Mr. Rajeev Aggarwal, ASC alongwith Mr. Karan Singh,
Addl. Commissioner, Mr. Tripathi and Mr. J. Singh.
CORAM:-
HON'BLE MR. JUSTICE SANJEEV SACHDEVA
HON'BLE MR. JUSTICE RAVINDER DUDEJA
JUDGMENT
SANJEEV SACHDEVA, J. (ORAL)
1. Petitioner impugns order dated 01.05.2023 whereby the GST registration of the petitioner was cancelled retrospectively with effect from 01.07.2017. Petitioner also impugns Show Cause Notice dated 07.09.2022.
2. Vide impugned Show Cause Notice dated 07.09.2022, petitioner was called upon to show cause as to why the registration be
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"Fails to pay any amount of tax, interest or penalty to the account of the Central/State Government beyond a period of three months from the date on which such payment becomes due."
3. Petitioner was working in the name of M/s Raj Kumar Kukreja and was engaged in business of supply of renting of immovable property services and possessed GST registration.
4. Show cause notice dated 07.09.2022 was issued to the petitioner seeking cancellation of GST registration. The notice does not specify any cogent reason. The show cause notice requires the petitioner to appear before the undersigned i.e. authority issuing the notice. Notice does not give the name of the officer or place where the petitioner has to appear.
5. Further, the order dated 01.05.2023 passed on the show cause notice dated 31.08.2021 does not give any reasons for cancellation of the registration. It merely states "whereas no reply to notice show cause has been submitted". However, the said order in itself is contradictory, the order states "reference to your reply dated 16.12.2022 in response to the notice to show cause dated 07.09.2022 " and the reason stated for cancellation is "whereas no reply to notice to show cause has been submitted". The order further states that effective date of cancellation of registration is 01.07.2017 i.e., a retrospective date.
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6. Neither the show cause notice nor the order spell out the reasons for cancellation. In fact, in our view, order dated 01.05.2023 does not qualify as an order of cancellation of registration. On one hand, it states that the registration is liable to be cancelled on account of failure to pay tax and on the other, in the column at the bottom there are no amounts stated to be due against the petitioner and the table shows nil demand.
7. Show Cause Notice did not put the petitioner to notice that the registration is liable to be cancelled retrospectively. Accordingly, the petitioner had no opportunity to even object to the retrospective cancellation of the registration.
8. In terms of Section 29(2) of the Central Goods and Services Tax Act, 2017, the proper officer may cancel the GST registration of a person from such date including any retrospective date, as he may deem fit if the circumstances set out in the said sub-section are satisfied. The registration cannot be cancelled with retrospective effect mechanically. It can be cancelled only if the proper officer deems it fit to do so. Such satisfaction cannot be subjective but must be based on some objective criteria. Merely, because a taxpayer has not filed the returns for some period does not mean that the taxpayer's registration is required to be cancelled with retrospective date also covering the period when the returns were filed and the taxpayer was
Signature Not Verified Digitally Signed By:RASHIM KAPOOR W.P.(C) 1361/2024 Page 3 of 6 Signing Date:28.02.2024 12:18:57 compliant.
9. It is important to note that, according to the respondent, one of the consequences for cancelling a tax payer's registration with retrospective effect is that the taxpayer's customers are denied the input tax credit availed in respect of the supplies made by the tax payer during such period. Although, we do not consider it apposite to examine this aspect but assuming that the respondent's contention in this regard is correct, it would follow that the proper officer is also required to consider this aspect while passing any order for cancellation of GST registration with retrospective effect. Thus, a taxpayer's registration can be cancelled with retrospective effect only where such consequences are intended and are warranted.
10. We notice that the show cause notice and the impugned order are also bereft of any details and further there is no reasoning in the said show cause notice and in the impugned order as to why the cancellation has been done retrospectively.
11. In view of the above, petition is allowed. The impugned show cause notice dated 07.09.2022, order of cancellation dated 01.05.2023 are accordingly set aside. The GST registration of the petitioner is restored. Petitioner shall make the necessary compliances under Rule 23 of the Central Goods and Services Tax Rules, 2017. Further, the Respondents are directed to open the required portal.
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12. It is clarified that respondents are at liberty to take further action in accordance with law and are not precluded from taking any steps for recovery of any tax, penalty or interest that may be due from the petitioner.
13. Petition is disposed of in above terms.
14. This Court noticed on 31.01.2024 from several petitions are filed before this Court, that all orders and notices that bear digital signatures, display the name of "DS Goods and Services Tax Network 07". Reference was also drawn to an order passed by the High Court of the Judicature at Bombay dated 20.07.2022 in W.P. (C) 8474/2022 [DBS Tradelink and Advisors Pvt. Ltd. vs. The State of Maharashtra and Anr.] which refers to an order of Gujarat High Court dated 24.02.2022, pointing out to similar infirmities in the issuance of notices and orders. A direction was issued to the respondents to set their house in order. It appeared that despite lapses of nearly two years, no remedial steps had been taken by the respondents.
15. Accordingly, this Court directed the Principal Commissioner, Goods and Services Tax/Special Commissioner, Goods and Services Tax as well as the Director of "DS Goods and Services Limited to be connected through video conference on the next date of hearing.
16. Pursuant to the order dated 31.01.2024, Mr. Karan Singh, Addl.
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Commissioner, Mr. Tripathi and Mr. J. Singh officer of the office of the Commissioner GST were connected through VC and assured that the rectificatory steps shall be taken up for correcting the system error.
17. They further submits that for certain corrections and rectificatory steps the system partners are required to be involved for which would be required.
18. Mr. Karan Singh prays for time to file an affidavit placing on record the timelines for putting the system in order. The Affidavit be filed within six weeks.
19. Since the officers have explained the situation, personal presence of the officers is dispensed with.
20. List on 08.04.2024 for reporting compliance.
SANJEEV SACHDEVA, J
FEBRUARY 22, 2024/ss RAVINDER DUDEJA, J
Signature Not Verified
Digitally Signed
By:RASHIM KAPOOR W.P.(C) 1361/2024 Page 6 of 6
Signing Date:28.02.2024
12:18:57
