Notably, the SCN did not propose the retrospective cancellation

In a notable decision, the Delhi High Court, has limited the retrospective effect of the cancellation of Goods and Services Tax ( GST ) registration for Alaknanda Steel. The case arose after the petitioner’s application for cancellation of its GST registration was initially rejected, followed by a subsequent order that cancelled the registration retrospectively from July 1, 2017. Get a Copy of Supreme Court Judgments on GST with Free E-Book Access, Click here Alaknanda Steel, which had discontinued its business, applied for cancellation of its GST registration effective from May 20, 2023. However, the GST authorities not only rejected this application but also issued a show-cause notice (SCN) on the same day, leading to the cancellation of the registration with effect from July 1, 2017. The petitioner challenged this retrospective cancellation, arguing that it was not provided an adequate opportunity to contest the retrospective effect as it was not mentioned in the SCN. The Delhi High Court Division Bench of Justice Vibhu Bakhru and Justice Tara Vitasta Ganju observed that the SCN did not propose the retrospective cancellation, and no specific details were provided regarding the allegations. The court also noted that this was a violation of the principles of natural justice as the petitioner was not given a fair opportunity to be heard. The High Court also critically examined the SCN and the cancellation order, finding several procedural lapses. The court noted that the SCN failed to provide specific details of the alleged violations and merely cited Rule 21(e) without explaining how the petitioner had supposedly violated the provisions related to wrongful availment of Input Tax Credit (ITC). Additionally, the SCN did not propose the retrospective cancellation, nor did it specify any date or time for a personal hearing, thereby depriving the petitioner of a fair opportunity to present their case. Get a Copy of Supreme Court Judgments on GST with Free E-Book Access, Click here Consequently, the Delhi High Court set aside the retrospective cancellation, ruling that the cancellation of GST registration shall be effective prospectively from June 9, 2023, the date of the SCN, rather than from July 1, 2017. The court also clarified that the authorities are not precluded from initiating fresh proceedings for any statutory violations or for considering retrospective cancellation, provided it is done in accordance with the law.