No Opportunity Given for Objection to Petitioner: Delhi HC Revises Retrospective GSTIN Cancellation

FACTS: Anil Soni, the proprietor of M/S Soni Sales Corp, a trader in rubber and rubber chemicals, faced an unexpected challenge when he received a Show Cause Notice (SCN) on 26.05.2022. The notice sought the cancellation of his GST registration, citing only "others" as the reason. Without providing any substantial evidence, the authorities cancelled his registration retrospectively from 02.07.2017. Soni, who had already ceased his business operations, was represented by counsel Puneet Rai, who emphasized Soni's disinterest in continuing the business. However, the cancellation's retrospective nature had unintended consequences on Soni's clients, denying them the right to claim Input Tax Credit (ITC) for transactions during the disputed period.

The court observed that both the SCN and the cancellation order lacked specific reasons for the retrospective action. More importantly, Soni was not given a chance to object or respond to the order, which is a fundamental principle of justice.

HELD: A division bench of Justice Sanjeev Sachdeva and Justice Ravinder Dudeja took note of the procedural shortcomings. The court decided to modify the order, recognizing that the retrospective cancellation from 02.07.2017 was unfair without giving Soni an opportunity to contest it. The bench revised the effective date of cancellation to 08.06.2022, the date of the original order, instead of the backdated 2017 date.

CONCLUSION: The Delhi High Court's decision in this case highlights the importance of transparency and procedural fairness in administrative actions. The court acknowledged that Anil Soni was not given a fair chance to object to the retrospective cancellation of his GST registration. By revising the cancellation date to 08.06.2022, the court ensured that justice was served, preventing the unwarranted denial of ITC claims to Soni's clients and upholding the principles of natural justice.