Delhi High Court – Orders
Ms Mohit Enterprises vs Commissioner Of State Gst And Vat … on 4 March, 2025
Author: Yashwant Varma
Bench: Yashwant Varma
$~3
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ W.P.(C) 1086/2025
MS MOHIT ENTERPRISES .....Petitioner
Through: Mr. Siddarth Malhotra, Adv.
versus
COMMISSIONER OF STATE GST AND VAT
DEPARTMENT OF TRADE AND TAXES DELHI
.....Respondent
Through: Appearance not given.
CORAM:
HON'BLE MR. JUSTICE YASHWANT VARMA
HON'BLE MR. JUSTICE HARISH VAIDYANATHAN
SHANKAR
ORDER
% 04.03.2025
1. This writ petition has been preferred seeking the following
reliefs:
“i. Issue a writ in the nature certiorari and/ or any other appropriate
writ, for setting aside the respondent department decision for
cancellation of petitioner’s registration of goods and service tax vide
F.No DT&T/OHA Appeal/SCTT-I/2024-25/1054-1058 dated
30.05.2024 along with the decision of jurisdictional authority i.e. Ld.
AVATO, Ward-63, Delhi, bearing Reference No.
ZA071221173262Y dated 28.12.2021 cancelling of the registration
of the petitioner w.e.f 01.07.2017 and directing respondent
department to restore the same.
ii. Pass any other order(s) as this Hon’ble Court may deem fit and
more appropriate in order to grant relief to the petitioner.”
2. We had originally stood over the matter awaiting judgment
being rendered on M/s Addichem Speciality LLP v. Special
W.P.(C) 1086/2025 Page 1 of 11
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Commissioner, Department of Trade and Taxes1 and the batch of
writ petitions connected therewith. That batch was concerned with the
interpretation liable to be accorded to Section 107(4) of the Central
Goods and Services Tax Act, 20172 and whether the time period for
preferment of an appeal could be extended by imputing the general
principles of limitation.
3. We had ultimately and on a conspectus of the decisions
rendered by various High Courts on the subject as well as the statutory
provisions which apply held as under:
“64. A careful reading of the aforesaid decision would bring to the
fore that the legislative intention to provide a specific period of
limitation, thereby excluding the general applicability of
the Limitation Act, 1963, must be respected. The Supreme Court has
observed that the plenary powers of the High Court cannot in any
case exceed the jurisdictional powers under Article 142 of
the Constitution of India, and even the Supreme Court cannot extend
the period of limitation de hors the provisions contained in any
statutory enactment.
65. Section 107(4) firstly prescribes a general time frame within
which an appeal may be preferred. Once that period has elapsed, it
stipulates that the appeal may be instituted within a further period of
one month. The provision thus prescribes an additional period of one
month within which an appeal may be instituted. That section
however stops at that and does not allude to aspects such as
sufficient cause or other similar factors which may have prevailed
and led to the appeal not being lodged within the time prescribed.
The provision thus clearly excludes the general principles which the
law recognises as relevant for the purposes of condonation of delay.
It is this facet of Section 107(4) which appears to have weighed
upon various High Courts to hold that the said provision excludes
the principles underlying Section 5 and other provisions concerned
with condonation contained in the Limitation Act. It is this facet
which triggers Section 29 of the Limitation Act and results in the
exclusion of the other provisions governing condonation contained
in that statute.
66. At this juncture, it would be expedient to refer to few judgments
of the other High Courts on the subject. Reference can be invited to1
2025 SCC OnLine Del 646
2
CGST ActW.P.(C) 1086/2025 Page 2 of 11
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the decision of the Chhattisgarh High Court in Nandan Steels &
Power Ltd. v. State of Chhattisgarh, wherein it was held that the
statutory timeline for filing an appeal under Section 107(1) of the
CGST Act is three months from the date the decision or order is
communicated to the appellant. However, Section 107(4) provides a
limited extension of one additional month, at the discretion of the
appellate authority, if sufficient cause is demonstrated. The Court
observed that the Legislature, while allowing an extension in specific
instances, did not intend for the Limitation Act to apply to
proceedings under the CGST Act. If such an intention existed, there
would have been no need to confer special powers on the High
Court to entertain appeals beyond the prescribed period, subject to
sufficient cause being shown. This distinction is crucial because,
unlike other legislations where Section 5 of the Limitation Act
applies automatically via Section 29(2), the CGST Act prescribes a
rigid timeframe. Further, the absence of the phrase “but not
thereafter” in Section 107(4) does not dilute its mandatory nature.
67. Likewise, the Allahabad High Court in Yadav
Steels v. Commissioner dealt with a matter wherein the appeal was
filed 66 days after the expiry of the additional one-month period,
making it ineligible for condonation, decision of the Appellate
Authority that refused to entertain it in view of section 107(4) was
upheld. Emphasizing the significance of the statutory limitations in
tax laws, particularly in the context of the CGST Act, it was also
pointed out that limitation provisions are crucial in ensuring the
timely resolution of disputes, promoting legal certainty, and
facilitating efficient tax compliance. It was held that given the
complexity of tax laws and the potential for disputes between
taxpayers and authorities, such provisions establish a structured
framework that prevents undue delays and ensures fiscal stability. It
was thus observed that Section 107 of the CGST Act, being a self-
contained provision, prescribes a specific limitation period for filing
appeals, reflecting the legislative intent to expedite dispute
resolution and by setting strict time limits, the provision ensures that
tax-related matters are adjudicated without unnecessary delays,
thereby enhancing administrative efficiency and revenue certainty. It
was held that Section 5 of the Limitation Act generally allows for
extensions in exceptional cases but its application is expressly
excluded in taxation statutes where specific timeframes are
prescribed.
68. That being the legal position, we unhesitatingly find that the
decision of the Calcutta High Court in the case of Mukul
Islam v. Assistant Commissioner of Revenue wherein the Court
overturned the order that had rejected the appeal holding that the
CGST law does not explicitly exclude the Limitation Act as also the
decision of the Andhra Pradesh High Court in Venkateshwara RaoW.P.(C) 1086/2025 Page 3 of 11
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Kesanakurti v. State of AP, wherein it was held that Limitation Act
is applicable to condone the delay in filing the appeal beyond one
month under the CGST Act, cannot be of any assistance to the
petitioners.
69. In summary, the power to condone delay caused in pursuing a
statutory remedy would always be dependent upon the statutory
provision that governs. The right to seek condonation of delay and
invoke the discretionary power inhering in an appellate authority
would depend upon whether the statute creates a special and
independent regime with respect to limitation or leaves an avenue
open for the appellant to invoke the general provisions of the
Limitation Act to seek condonation of delay. The facility to seek
condonation can be resorted provided the legislation does not
construct an independent regime with respect to an appeal being
preferred. Once it is found that the legislation incorporates a
provision which creates a special period of limitation and proscribes
the same being entertained after a terminal date, the general
provisions of the Limitation Act would cease to apply.
70. In view of the forgoing discussion, as it is evident that each of
the appeals was filed beyond the prescribed period of limitation
provided by Sections 107(1) and 107(4) of the CGST Act, the
aforesaid writ petitions lack merit and are accordingly dismissed.”
It is thus apparent that insofar as the challenge to the appellate order
dated 30 May 2024 is concerned, nothing further would survive.
4. That only leaves us to examine the retrospective cancellation of
Goods and Services Tax3 registration of the writ petitioner and which
was ordained to come into effect in terms of the impugned order of 28
December 2021 from 01 July 2017.
5. We find from the disclosures made on the record that the
aforesaid order was preceded by a Show Cause Notice4 dated 11
November 2021 and which reads as follows:
“Show Cause Notice for Cancellation of Registration
Whereas 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:
3
GST
4
SCNW.P.(C) 1086/2025 Page 4 of 11
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1 Any Taxpayer other than composition taxpayer has not
filed returns for a continuous period of six monthsYou are hereby directed to furnish a reply to the notice within seven
working days from the date of service of this notice.
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
11/11/2021
Place: Delhi
Date: 11/11/2021
Ashwani
Sales Tax Officer Class II / AVATO
Ward 63:Zone 6:Delhi ”
6. The petitioner does not appear to have submitted any response
to that SCN and which ultimately resulted in the cancellation of its
GST registration by the order dated 28 December 2021.
7. As is evident from a reading of the SCN, the same had alleged
that the writ petitioner had failed to file returns for a continuous period
of six months. This allegation as levelled has not been denied in the
body of the writ petition. In view of the above, we are only left to
examine the question whether a retrospective cancellation of the GST
registration of the writ petitioner was justified.
8. Dealing with an identical question we had in Riddhi Siddhi
Enterprises v. Commissioner of Goods and Services Tax (CGST),
South Delhi & Anr.5 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 a5
W.P.C 8061/2024 dated 25 September 2024W.P.(C) 1086/2025 Page 5 of 11
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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”
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
W.P.(C) 1086/2025 Page 6 of 11
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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 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
W.P.(C) 1086/2025 Page 7 of 11
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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 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.
W.P.(C) 1086/2025 Page 8 of 11
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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) 1086/2025 Page 9 of 11
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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
W.P.(C) 1086/2025 Page 10 of 11
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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.
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.”
9. As is manifest from a reading of the SCN, the respondents had
failed to place the petitioner on notice of a proposed action to cancel
their registration retrospectively. To the aforesaid extent and in light
of the principles enunciated in Riddhi Siddhi Enterprises, we find
ourselves unable to sustain the final order of 28 December 2021
insofar as it effects cancellation from a retrospective date.
10. Accordingly, and for all the aforesaid reasons, we allow the
instant writ petition and quash the order dated 28 December 2021 to
the extent that it carries a stipulation of the cancellation coming into
effect from 01 July 2017. The cancellation shall consequently take
effect from the date of issuance of the SCN, namely, 11 November
2021.
YASHWANT VARMA, J
HARISH VAIDYANATHAN SHANKAR, J
MARCH 04, 2025/RW
W.P.(C) 1086/2025 Page 11 of 11
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