Non-Payment Of Tax To Govt For 3 Months After Due Date Not Ground To Cancel GST Registration: Delhi HC

The Delhi High Court has made it clear that non-payment of dues in the form of tax, interest or penalty, by a registered entity to the account of Central/State Government beyond a period of three months after due date, is not a ground to cancel its registration under the Central Goods and Services Tax Act.

A bench of Justices Vibhu Bakhru and Sachin Datta took note of Section 29 of CGST Act which prescribes for cancellation of a tax payer’s GST registration and observed,

“The only reason set out in the said SCN for proposing to cancel the petitioner’s GST registration is failure to pay tax, interest or penalty within a period of three months from the date on which the said amount became due. However…non-payment of dues for a period of three months is not a prescribed ground for canceling the petitioner’s GST registration.”

Section 29 lays down following grounds:(i) On discontinuation of business upon owner’s death; (ii) not furnishing returns for such continuous tax period as may be prescribed; (iii) not commenced business within six months from the date of registration/registration obtained by fraud.

Rule 21 of CGST Rules further stipulate that registration of a person is liable to be cancelled, if business is not conducted from the declared place of business; generates fake invoices; falsely avails input tax credit; furnishes details of outward supplies for one or more tax periods which is in excess of the outward supplies declared by him in his valid return under section 39 for the said tax periods; violates Rule 86B; etc.

In the case at hand, Petitioner’s registration was canceled with retrospective effect.

The High Court even noted that the impugned order canceling Petitioner’s GST registration indicated that no amount has been determined as payable by the petitioner.

“The Central Tax, State Tax, Integrated Tax and Cess WP(C) 12255/2024 payable by the petitioner is reflected as, 0.0” Court observed and restored Petitioner’s registration.

Appearance: Advocates Pulkit Verma, Upender Sah and Peyush Pruthi for Petitioner; Additional Standing Counsel Rajeev Aggarwal and Advocate Shubham Goel for Respondent

Case title: Subhana Fashion v. Commissioner Delhi Goods And Service Tax

Box no.: WP(C) 12255/2024

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