19 Apr Delhi High Court’s Game-Changing Decision on GST Cancellation!
Introduction
In a recent legal development, the Delhi High Court has addressed the modification of a GST registration cancellation order in a case involving Optimum Viking Satcom India Pvt. Ltd. versus Principal Commissioner Delhi Goods and Services Tax. This significant judgment underscores the importance of detailed reasoning and procedural fairness in such matters, shedding light on the complexities of tax law and administrative procedures.
Facts of the Case & Timeline
- Issue of Cancellation: The Petitioner, Optimum Viking Satcom India Pvt. Ltd., contested the cancellation of its GST registration, which was set to be effective from 01.07.2017. The cancellation order was issued on 10.06.2022, alongside a Show Cause Notice (SCN) dated 18.11.2021.
- Reasons Behind Cancellation: The SCN raised concerns about the Petitioner's failure to deposit collected tax amounts within three months from the due date. Despite the Petitioner's relocation of business operations to Noida in August 2021 and the filing of returns until 30.11.2021, the cancellation order was issued, citing non-compliance.
- Petitioner's Response: The Petitioner objected to the lack of specifics in the SCN regarding un-deposited taxes and the retrospective nature of the cancellation. They argued that the cancellation was conducted without affording them a fair opportunity to object. Moreover, despite complying with return filings until November 2021, the cancellation was issued without adequate reasons, despite the acknowledgment of responses.
Issue
The primary issue at hand pertains to the legality and procedural fairness of canceling the GST registration retrospectively and without providing detailed reasons in both the SCN and the subsequent order.
Held
In its judgment, the Delhi High Court scrutinized the cancellation order and the SCN, finding them lacking in sufficient detail and rationale, particularly regarding the retrospective nature of the cancellation. The Court modified the cancellation to be effective from 30.11.2021, aligning with the Petitioner’s compliance in filing returns until that date. Additionally, the Court allowed the Respondents to pursue any outstanding tax, penalty, or interest dues legally.
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