Delhi High Court – Orders
Jsd Traders Llp vs Additional Commissioner, Cgst & Anr on 3 March, 2025
Author: Yashwant Varma
Bench: Yashwant Varma
$~70
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ W.P.(C) 2608/2025
JSD TRADERS LLP .....Petitioner
Through: Mr. Rana Gurtej Singh, Adv.
versus
ADDITIONAL COMMISSIONER, CGST & ANR.
.....Respondents
Through: Ms. Sushila Narang, Adv.
CORAM:
HON'BLE MR. JUSTICE YASHWANT VARMA
HON'BLE MR. JUSTICE HARISH VAIDYANATHAN
SHANKAR
ORDER
% 03.03.2025
CM APPL. 12411/2025 (Ex.)
Allowed, subject to all just exceptions.
The application stands disposed of.
W.P.(C) 2608/2025
1. The writ petitioner has approached this Court seeking the
following reliefs:
“i. Issue of a writ in the nature of Certiorari for quashing the Order of
Cancellation of GST Registration under 29 of the Central Goods and
Service Tax Act, 2017 dated 20.03.2024 (Annexure P-3); AND/ORii. Issue a writ in nature of Certiorari for quashing of Order dated
10.01.2025 (Annexure P-6) whereby the Appeal filed by the
Petitioner assailing the Order of Cancellation of GST Registration was
dismissed by the Respondent No. 1 on the ground of limitation;
AND/ORiii. Issue a writ in the nature of Mandamus directing Respondents to
restore the GST Registration 07AANFJ4541J1Z3 assigned to theW.P.(C) 2608/2025 Page 1 of 10
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Petitioner; AND/ORiv. Issue of any other appropriate writ or direction which this Hon’ble
Court may deem fit and proper in the circumstances of the case;
v. Any other order or relief as this Hon’ble Court deems fit and proper
in the interest of justice.”
2. The challenge is principally laid to the order of 20 March 2024
pursuant to which the Goods and Services Tax1 registration of the
writ petitioner has come to be cancelled with retrospective effect from
09 November 2017. The said order is extracted hereinbelow:
“Order for Cancellation of Registration
This has reference to show cause notice issued dated 01/08/2023.
The effective date of cancellation of your registration is 09/11/2017.
3. It may be noted that a registered person furnishing return under
sub-section (1) of section 39 of the CGST Act, 2017 is required to
furnish a final return in FORM GSTR-10 within three months of the
date of this order.
4. You are required to furnish all your pending returns.
5. It may be noted that the cancellation of registration shall not affect
the liability to pay tax and other dues under this Act or to discharge
any obligation under this Act or the rules made thereunder for any
period prior to the date of cancellation whether or not such tax and
other dues are determined before or after the date of cancellation.
Place: RANGE – 164
Date: 20/03/2024
Gaurav Kumar
Superintendent
Ward 84″
3. The aforesaid order was preceded by the issuance of a Show
Cause Notice2 dated 01 August 2023 which reads as follows:
1
GST
2
SCNW.P.(C) 2608/2025 Page 2 of 10
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“Show Cause Notice for Cancellation of RegistrationWhereas on the basis of information which has come to my notice, it
appears that your registration is liable to be cancelled for the
following reasons:
1 Section 29(2)(e)-registration obtained by means of fraud,
wilful misstatement or suppression of factsYou are hereby directed to furnish a reply to the notice within seven
working days from the date of service of this notice.
You are hereby directed to appear before the undersigned on
08/08/2023 at 03:00 PM
If you fail to furnish a reply within the stipulated date or fail to
appear for personal hearing on the appointed date and time, the case
will be decided ex parte on the basis of available records and on
merits.
Please note that your registration stands suspended with effect from
01/08/2023
Kindly refer the supportive document attached for case specific
details.
Place: Delhi
Date: 01/08/2023″
4. Although the record would bear out that the aforesaid SCN was
duly served, the petitioner does not appear to have filed a response and
which led to the passing of the final order dated 20 March 2024.
5. As is manifest from the aforesaid, neither the SCN nor the final
order alludes to or rests upon any material on the basis of which the
respondent would have formed the opinion that Section 29(2)(e) of the
Central GST Act, 20173 was violated nor did it embody an intent of a
proposed retrospective cancellation of the GST registration of the
petitioner.
6. We had insofar as the latter issue is concerned and bearing in
3
CGST Act
W.P.(C) 2608/2025 Page 3 of 10
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mind the power that Section 29 of the CGST Act confers upon the
respondents to cancel registration from a retrospective date, in Riddhi
Siddhi Enterprises vs. Commissioner of Goods and Services Tax
(CGST), South Delhi & Anr.4 held as follows:
“5. As is manifest from a reading of Section 29, clauses (a) to (e) of
Section 29(2) constitute independent limbs on the basis of which a
registration may warrant cancellation. While the provision does enable
the respondents to cancel that registration with retrospective effect, the
mere existence or conferral of that power would not justify a revocation
of registration. The order under Section 29(2) must itself reflect the
reasons which may have weighed upon the respondents to cancel
registration with retrospective effect. Given the deleterious consequences
which would ensue and accompany a retroactive cancellation makes it all
the more vital that the order be reasoned and demonstrative of due
application of mind. It is also necessary to observe that the mere
existence of such a power would not in itself be sufficient to sustain its
invocation. What we seek to emphasise is that the power to cancel
retrospectively can neither be robotic nor routinely applied unless
circumstances so warrant. When tested on the aforesaid precepts it
becomes ex facie evident that the impugned order of cancellation cannot
be sustained.
6. We note that while dealing with the right of the respondents to cancel
GST registration with retrospective effect and the manner in which such
power should be exercised in accordance with the statutory scheme was
an issue which was noticed in Ramesh Chander vs Assistant
Commissioner of Goods and Services Tax, Dwarka Division, CGST
Delhi & Anr.4 The Court in Ramesh Chander taking note of the contours
of Section 29 had held:-
“1. The petitioner impugns order in appeal dated 29.12.2023,
whereby the appeal filed by the petitioner has been dismissed
solely on the ground of limitation. Petitioner had filed the
appeal impugning order dated 13.07.2022 whereby the GST
registration of the petitioner was cancelled retrospectively with
effect from 01.07.2017. Petitioner also impugns Show Cause
Notice dated 07.04.2022.
2. Vide impugned Show Cause Notice dated 07.04.2022,
petitioner was called upon to show cause as to why the
registration be not cancelled for the following reasons:-
“Any Taxpayer other than composition taxpayer has
not filed returns for a continuous period of six
months”
4
W.P.C 8061/2024 dated 25 September 2024
W.P.(C) 2608/2025 Page 4 of 10
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3. Petitioner was in the business of services involving repair,
alterations, additions, replacements, renovation, maintenance
or remodelling of the building covered above, General
construction services of harbours, waterways, dams, water
mains and lines, irrigation and other waterworks, General
construction services of long-distance underground/ overland/
submarine pipelines, communication and electric power lines
(cables); pumping stations and related works; transformer
stations and related works, General construction services of
local water & sewage pipelines, electricity and communication
cables & related works, Installation, assembly and erection
services of other prefabricated structures and constructions and
possessed a GST registration.
4. A show cause notice was issued to the petitioner on
07.04.2022 Though the notice does not specify any cogent
reason, there is an observation in the notice stating failure to
furnish returns for a continuous period of six months. 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 or time where the
petitioner has to appear.
5. Further the order dated 13.07.2022 passed on the show
cause notice does not give any reasons for cancellation of the
registration. It, however, states that the registration is liable to
be cancelled for the following reason “whereas no reply to
notice to show cause has been submitted”. However, the said
order in itself is contradictory, the order states “reference to
your reply dated 16.04.2022 in response to the notice to show
cause dated 07.04.2022” 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. retrospective
date.
6. Neither the show cause notice, nor the order spell out the
reasons for retrospective cancellation. In fact, in our view,
order dated 13.07.2022 does not qualify as an order of
cancellation of registration.
7. As per the petitioner, the said order reflected that the GST of
the Petitioner stands cancelled from 01.07.2017 even though
returns thereafter have been filed by the Petitioner.
8. We notice that the show cause notice as well as the
impugned order of cancellation, are themselves vitiated on
account of lack of reason and clarity. The appeal has been
dismissed solely on the ground of limitation. Since the very
foundation of entire proceedings i.e. show cause notice and the
order of cancellation are vitiated, we are of the view that no
W.P.(C) 2608/2025 Page 5 of 10
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purpose would be served in relegating the petitioner to the
stage of an appeal.
9. 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 compliant.
10. 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.
11. The show cause notice does not even state that the
registration is liable to be cancelled from a retrospective date.
12. The petition is allowed. The impugned show cause notice
dated 07.04.2022, order of cancellation dated 13.07.2022 and
the order in appeal dated 29.12.2023 are accordingly set aside.
GST registration of the petitioner is restored, subject to
petitioner filing requisite returns upto date.
13. It is clarified that since the petitioner could not have filed
the return after the GST registration was suspended, there shall
be no liability to pay any penalty or fine for delayed filing.
However, this would only apply in case petitioner files an
affidavit of undertaking that petitioner has not carried out any
business or raised invoices or taken any Input Tax Credit after
the registration was suspended with effect from 07.04.2022
i.e., the date of suspension of the registration.
14. Respondent would be at liberty to initiate appropriate
proceedings in accordance with law after giving a proper show
cause notice containing complete details, if so advised. Further
W.P.(C) 2608/2025 Page 6 of 10
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this order would not preclude the respondent from initiating
any steps in accordance with law, if it is found that the
petitioner had violated any provisions of the Act.
15. Petition is disposed of in the above terms.”
7. We further take note of the judgment in Delhi Polymers vs
Commissioner, Trade and Taxes & Anr.5 wherein the following was
observed:-
“1.Petitioner has filed the appeal impugning order of
cancellation of registration dated 15.12.2021 whereby the GST
registration of the Petitioner has been cancelled retrospectively
with effect from 01.07.2017. Petitioner also impugns Show
Cause Notice dated 04.09.2021.
2. Vide Show Cause Notice dated 04.09.2021, petitioner was
called upon to show cause as to why the registration be not
cancelled for the following reason:-
“Collects any amount representing the tax but fails to
pay the same 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 engaged in the business of Sanitary ware
Products & Accessories i.e., Baths, Shower, Washbasins, Seats
and Cover etc. and possessed GST registration.
4. Show Cause Notice dated 04.09.2021 was issued to the
Petitioner seeking to cancel its registration. However, the
Show Cause Notice also does 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.
5. Further, the impugned order dated 15.12.2021 passed on the
Show Cause Notice dated 04.09.2021 does not give any
reasons for cancellation. It, however, states that the registration
is liable to be cancelled for the following reason “whereas no
reply to the show cause notice has been submitted”. However,
the said order in itself is contradictory. The order states
“reference to your reply dated 15.12.2021 in response to the
notice to show cause dated 04.09.2021” and the reason stated
for the cancellation is “whereas no reply to notice 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.
6. Neither the show cause notice, nor the order spell out the
reasons for retrospective cancellation. In fact, in our view,
order dated 15.12.2021 does not qualify as an order of
cancellation of registration. On one hand, it states that the
W.P.(C) 2608/2025 Page 7 of 10
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registration is liable to be cancelled and on the other, in the
column at the bottom there are no dues stated to be due against
the petitioner and the table shows nil demand.
7. Learned Counsel for the Petitioner submits that the said
order reflected that the GST registration of petitioner stands
cancelled from 01.07.2017 even though returns thereafter have
been filed by the Petitioner.
8. He further submits that the petitioner is no longer interested
in continuing the business and the business has been
discontinued.
9. In terms of Section 29(2) of the Act, 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.
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 compliant.
10. 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 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.
11. It may be further noted that both the Petitioners and the
department want cancellation of the GST registration of the
Petitioner, though for a different reason.
12. In view of the fact that Petitioner does not seek to carry on
business or continue the registration, the impugned order dated
15.12.2021 is modified to the limited extent that registration
shall now be treated as cancelled with effect from 04.09.2021
i.e., the date when the Show Cause Notice was issued.
13. It is clarified that Respondents are also not precluded from
taking any steps for recovery of any tax, penalty or interest that
may be due in respect of the subject firm in accordance with
law.
W.P.(C) 2608/2025 Page 8 of 10
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14. Petition is accordingly disposed of in the above terms.”
8. In view of the aforesaid and in light of an abject failure on the part of
the authority to assign even rudimentary reasons for a retroactive
cancellation, we find ourselves unable to sustain the order impugned.”
7. In view of the above and when the impugned order is tested on
the aforenoted precepts, it becomes apparent that in the absence of
reasons having been assigned in the original SCN in support of a
proposed retrospective cancellation as well as a failure to place the
petitioner on prior notice of such an intent clearly invalidates the
impugned action. We are thus of the considered opinion that the writ
petition is entitled to succeed on this short ground alone. This,
however, would be without prejudice to the right of the respondent to
continue the SCN proceedings on the allegation of the initial
registration having been obtained by practise of fraud or
misrepresentation subject to the condition that the petitioner shall be
duly apprised of the material on the basis of which that opinion has
been formed.
8. Insofar as the rejection of the appeal is concerned in light of the
statutory period of limitation, it is conceded before us that the said
issue already stands answered against the writ petitioner in light of our
decision in M/s Addichem Speciality LLP v. Special
Commissioner, Department of Trade and Taxes5.
9. Accordingly, we allow the instant writ petition and quash the
order of 20 March 2024 insofar as it proceeds to cancel the
registration of the petitioner from a retrospective date. The respondent
shall now proceed to adjudicate the SCN afresh after affording an
opportunity of hearing to the writ petitioner. The aforesaid
5
2025 SCC OnLine Del 646
W.P.(C) 2608/2025 Page 9 of 10
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proceedings shall be drawn and concluded notwithstanding the
dismissal of the statutory appeal of the writ petitioner on account of
limitation and the bar that comes into play by virtue of Section 107(4)
of the CGST Act.
10. All rights and contentions of respective parties on merits are
kept open.
YASHWANT VARMA, J
HARISH VAIDYANATHAN SHANKAR, J
MARCH 03, 2025/RW
W.P.(C) 2608/2025 Page 10 of 10
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