Shree Balaji Transport v. The Commissioner of Central Tax Appeals

1. The petitioner impugns order dated 24.08.2023, whereby the appeal filed by the petitioner has been dismissed solely on the ground of limitation. Petitioner had IN THE HIGH COURT OF DELHI AT

NEW DELHI Date of decision 15377/2023 & CM APPL. 61691/2023 SHREE BALAJI TRANSPORT versus THE COMMISSIONER OF CENTRAL TAX APPEALS –I & ANR. Advocates who appeared in this case: Mr. Sahil Mongia and Mr. Shahil Rao, Advocate. Respondents: Ms. Arunima Dwivedi, Senior Standing Counsel for CBIC with Ms. Pinky Pawan and Mr. Aakash Pathak, Advocates. HON’BLE MR.

JUSTICE SANJEEV SACHDEVA HON'BLE MR.

JUSTICE RAVINDER DUDEJA

JUDGMENT

SANJEEV SACHDEVA, J. (ORAL) The petitioner impugns order dated 24.08.2023, whereby the Petitioner had filed the appeal impugning order dated IN THE HIGH COURT OF DELHI AT NEW DELHI Date of decision: 08.01.2024 61691/2023..... Petitioner..... Respondents Mr. Sahil Mongia and Mr. Shahil Rao, Advocate. Ms. Arunima Dwivedi, Senior Standing Counsel for CBIC with Ms. Pinky Pawan and Mr. Aakash The petitioner impugns order dated 24.08.2023, whereby the filed the appeal impugning order dated 07.02.2023 whereby the GST registration of the petitioner cancelled retrospectively

2. Petitioner was in the business of transport and possessed a GST registration. A show cause notice was issued to the 08.11.2022 calling upon the petitioner to show cause as to why the registration be not cancelled for the reason under Section 39 of the Central Go

3. Though the notice does not specify any cogent reason, there is an observation in the notice stating “failure to furni 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 given the name of the officer or place where the petitioner has to appear a

4. Further the order dated 07.02.2023 notice merely refers to the reply filed by the petitioner on 09.12.2022 and 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 “file all returns and pay all dues, if any”. The order further states that effective date of cancellation of registration is 31.03.2022 i.e. a

5. Neither the show cause notice nor for cancellation. In fact, in our view, order dated 07.02.2023 does not qualify as an order of cancellation of registration. On the one hand, it 07.02.2023 whereby the GST registration of the petitioner retrospectively with effect from 31.03.2022. Petitioner was in the business of transport and possessed a GST registration. A show cause notice was issued to the alling upon the petitioner to show cause as to why the registration be not cancelled for the reason “returns furnished by you under Section 39 of the Central Goods and Services Tax Act, 2017 Though the notice does not specify any cogent reason, there is an observation in the notice stating “failure to furni the petitioner has to appear and merely states “jurisdiction officer Further the order dated 07.02.2023 passed on the show cause ates that the registration is liable to be cancelled for the a retrospective date. Neither the show cause notice nor the order spell out the reasons 07.02.2023 whereby the GST registration of the petitioner was Petitioner was in the business of transport and possessed a GST registration. A show cause notice was issued to the petitioner on alling upon the petitioner to show cause as to why the “returns furnished by you ods and Services Tax Act, 2017”. Though the notice does not specify any cogent reason, there is an observation in the notice stating “failure to furnish returns for a jurisdiction officer”. on the show cause ates that the registration is liable to be cancelled for the the order spell out the reasons states that the registration is liable to be is “file all returns and pays all dues, if any at the bottom there are no dues stated to be due against the petitioner and the table shows nil demand.

6. As per the petitioner, petitioner could not furnish returns as petitioner had suffered lockdown and the business had completely stopped and no income was even generated during the period.

7. We notice that the show cause noti 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 view that no purpose would be served in relegating the petitioner to the stage of an appeal.

8. In terms of Section 29(2) of the Central Goods and Services Tax Act, 2017, the proper officer may cancel the person from such date including any retrospective date, as he may deem fit if the circumstances set out in the said sub satisfied. The registration cannot be cancelled with retrospective effect mechanically. It can be can to do so. Such satisfaction cannot be subjective but must be based on some objective criteria. Merely, because a taxpayer has not filed the states that the registration is liable to be cancelled and the reason given file all returns and pays all dues, if any” on the other, i and the table shows nil demand. the petitioner, petitioner could not furnish returns as petitioner had suffered a severe setback in the business due to was even generated during the period. We notice that the show cause notice as well as the impugned cause notice and the order of cancellation are vitiated, we are of the of an appeal. 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 deem fit if the circumstances set out in the said sub mechanically. It can be cancelled only if the proper officer deems it fit cancelled and the reason given ” on the other, in the column the petitioner, petitioner could not furnish returns as in the business due to ce as well as the impugned the order of cancellation are vitiated, we are of the In terms of Section 29(2) of the Central Goods and Services Tax GST registration of a deem fit if the circumstances set out in the said sub-section are celled only if the proper officer deems it fit returns for some period does not mean that the taxpayer’s registratio is required to be cancelled with retrospective date also covering the period when the returns were filed and the taxpayer was compliant.

9. It is important to note that, according to the respondent, one of the consequences for cancelling a tax payer’s regi 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 th 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 registrati where such consequences are intended and are warranted.

10. The show cause notice does not even state that the registration is liable to be cancelled from a retrospective date.