Kundan Trading Company v. Pr. Commissioner of Commerce and Taxation Department (Delhi High Court)

In Kundan Trading Company v. Pr. Commissioner of Department of Commerce and Taxationthe Delhi High Court has directed the respondent to consider the application for cancellation of GST registration made by the petitioner without holding it up due to any pending assessment or recovery proceedings. The petitioner, registered under the CGST/DGST laws, sought cancellation of his GST registration following the closure of his business in April 2024. The respondent issued a notice demanding additional documents, including balance sheets and GST returns, for verification. The petitioner responded by providing the necessary documents, including proof of identity and address. The court clarified that cancellation of GST registration does not absolve the taxpayer of liability for previous violations of the law. The Central Board of Indirect Taxes and Customs (CBIC) had issued a circular in 2018 stating that cancellations of registration should generally be processed within 30 days, except in specific circumstances such as incomplete applications. The court ordered that the cancellation application be considered without being delayed by further proceedings, ordering the applicant to ensure that his updated contact details are provided to the authorities. The petition was settled in these terms.

FULL TEXT OF THE DELHI HIGH COURT JUDGMENT/ORDER

1. Issue an opinion.

2. The learned counsel appearing for the respondent accepts the notice.

3. The applicant filed the present application, among others, requesting that directions be given to the respondent to cancel his GST registration with effect from 14.04.2024.

4. The petitioner has been registered under the Central Goods and Services Tax Act, 2017/Delhi Goods and Services Tax Act, 2017 (hereinafter). the CGST law/the DGST law) with effect from 03.09.2023 and has been assigned the Goods and Services Tax Identification Number (GSTIN): 07CIBPT9836L2ZG.

5. The petitioner claims to have closed its business with effect from 14.04.2024 and has therefore applied for cancellation of its GST registration with effect from 01.04.2014 by an application dated 14.04.2024. Pursuant to the said application, notice dated 13.05.2024 was issued by the competent officer seeking the following information/clarifications/documents relating to the cancellation application:-

“1 Cancellation Details – Date from which registration should be canceled – The date from which registration should be canceled is incorrect. Enter the correct date

2 Cancellation Details – Others (please specify) – please provide copy of Balance Sheet, P&L Statement, 26AS/TDS Statement Receipt and Sales Register, Stock Register, GST Reconciliation Return entry and exit, also file all GST returns, provide proof of identity and proof of address of the owner/partner/director, provide PPOB (principal place of business) documents. As PPOB is leased/consented, provide a permanent address with documents in the future column with a working mobile and email address.

6. The petitioner has been requested to submit the response to the aforesaid notice on or before 22.05.2024. Further, the petitioner was informed that if he fails to submit his response before the stipulated date, his application for cancellation of his GST registration will be rejected.

7. The petitioner responded to the above notice on 17.05.2024 with all relevant documents including a copy of Aadhar Card, Pan Card, contact details and email address.

8. It is well settled that cancellation of the taxpayer’s registration does not absolve the taxpayer from liability for any violation of law prior to the date of cancellation. It is also clarified that in certain cases, the Competent Officer may pass orders under Section 29 of the CGST Act and the DGST Act for cancellation of GST registration of the taxpayer with retrospective effect, if there are reasons to do so.

9. The learned counsel for the respondent rightly points out that in cases where tax prayer is found to be non-existent, the said action may be justified.

10. The Central Board of Indirect Taxes and Customs has also issued a circular dated 26.10.2018, among others, clarifying as below:-

“5. Since cancellation of registration has no effect on the liability of the taxpayer for any act of commission/omission committed before or after the date of cancellation, the competent officer must accept all such requests within a period of 30 days from the date of submission of the application. request, except in the following circumstances:

a) The demand for GST REG-16 FORM is incomplete, that is to say when all the relevant information, as detailed in paragraph 4 above, has not been provided;

b) In the case of a transfer, amalgamation or amalgamation of companies, the new entity into which the applicant proposes to merge or amalgamate has not been registered with the tax authorities before the filing of the application for deregistration.

In all cases other than those listed in (a) and (b) above, the request for cancellation of registration must be immediately accepted by the competent official and the order for cancellation must be issued within GST REG-19 FORM the effective date of the cancellation being the same as the date from which the applicant requested the cancellation in GST REG-16 FORM. Under no circumstances can the effective date be earlier than the request date.

11. In view of the above, we consider it appropriate to direct the respondent to consider the petitioner’s application for cancellation of his GST registration, keeping in mind that the the cancellation must not be refused due to an assessment procedure or a procedure for recovering possible legal contributions from taxpayers. It is thus directed.

12. The applicant should ensure that the address for future correspondence is filed with the relevant agent along with the KYC documents, if not already done so.

13. The application is resolved in the above-mentioned terms. The pending application is also dismissed.