[dated May 20, 2024 from WP (C) No. 5264 of 2024 in Ravi Parkash Goel v. Sales Tax Officer]

In terms of Section 29(2) of the CGST Act, the proper officer may cancel the GST registration of a person from such date including any retrospective date, as he may deem fit if the circumstances set out in the said sub-section are satisfied. However, registration cannot be cancelled with retrospective effect mechanically. It can be cancelled only if the proper officer deems it fit to do so. Such satisfaction cannot be subjective but must be based on some objective criteria. Merely, because a taxpayer has not filed the returns for some period does not mean that the taxpayer's registration is required to be cancelled with retrospective date also covering the period when the returns were filed and the taxpayer was compliant.

One of the consequences of cancelling a taxpayer's registration with retrospective effect is that the taxpayer's customers are denied the input tax credit availed in respect of the supplies made by the tax payer during such period. The taxpayer's contention is required to consider this aspect while passing an order for cancellation of GST registration with retrospective effect. Thus, a taxpayer's registration can be cancelled with retrospective effect only where such consequences are intended and are warranted.

In view of the foregoing, wherein the Petitioner does not seek to carry on business or continue the registration, the impugned order was modified to the limited extent that registration shall be treated as cancelled only with effect from the date when petitioner filed an application seeking cancellation of GST registration.