Impact of DRC-01 Notices on GST Cancellation

Introduction

Delve into the recent verdict by the Delhi High Court concerning GST registration cancellation despite pending DRC-01 notices.

Facts of the Case

The case involved Chetan Garg’s petition seeking cancellation of his GST registration due to ceasing business operations under the registered GST number. Despite compliance with filing returns until January 2024 and responding to queries, his cancellation request was twice rejected in February 2024.

Issue

The primary issue was whether the pendency of GST DRC-01 notices for financial years 2018-19 to 2023-24 could justify the denial of Chetan Garg’s GST registration cancellation.

Held by the Court

The Delhi High Court held that the mere existence of pending DRC-01 notices cannot serve as a valid ground for denying the cancellation of GST registration under Section 29 of the CGST Act, 2017.

Court’s Verdict

The court emphasized that proceedings under DRC-01 are independent of the cancellation process and ordered the cancellation of Chetan Garg’s GST registration from 1st February 2024. It clarified that this cancellation does not affect ongoing proceedings related to DRC-01 initiated by the tax authorities.

Conclusion

The verdict reaffirms the rights of taxpayers to seek cancellation of GST registration without impediment solely based on the pendency of tax recovery notices like DRC-01. It underscores the importance of upholding procedural fairness while ensuring compliance with tax laws.