Business

Delhi HC Asserts Legal Procedure for GSTIN Cancellation: Order Reversed

July 30, 2024
Team Business

GSTIN Cancellation Must Be As Per GST Law Not Arbitrary U/S 29(2): Delhi HC Cancels Order

The Delhi High Court has emphasized that the cancellation of GST registration must be reasonable and not arbitrary under Section 29(2) of the Goods and Services Tax (GST) Act. In a recent ruling, the court set aside the order cancelling the GST registration of M/s. Elasto Rubber Pvt Ltd and sent the case back to the Appellate Authority for a fresh decision based on merits.

Background

The order dated 28.06.2024 cancelling the GST registration of M/s. Elasto Rubber Pvt Ltd was challenged by the applicant due to delay in their petition under section 107 of the CGST, 2017/Delhi Goods and Services Tax Act (CGST Act, 2017/DGST Act).

Key Points

  1. The applicant was registered with GST authorities from 01.07.2017 with GSTIN 07AAACE6120CIZB.
  2. Due to family medical issues and the impact of Covid-19, there were delays in legal compliances.
  3. A Show Cause Notice was issued on 08.10.2022, leading to the suspension and eventual cancellation of the applicant’s GST registration.
  4. The cancellation order did not provide reasons for the retrospective cancellation from 01.07.2017.

Court Ruling

The Delhi High Court remarked that the cancellation order should have proper reasoning as per Section 29(2) of the GST Act and should not be arbitrary. The court also raised concerns about how the cancellation of GST registration might hinder legitimate business activities.

Conclusion

On 28.06.2024, the court set aside the cancellation order and directed the Appellate Authority to re-evaluate the case without considering the delay. The court urged for an expeditious disposal of the petition within 8 weeks.

Case Details

  • Case Title: M/s. Elasto Rubber Pvt Ltd Vs Commissioner of SGST Delhi & Ors
  • Citation: W.P.(C) 9516/2024
  • Date: 15.07.2024
  • Appellant’s Counsel: Mr. Vibhas Kumar Jha, Mr. Rajat Pandey, and Ms. Manju Pandey, Advs.
  • Respondent’s Counsel: Mr. Udit Malik, Adv.

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