RETROSPECTIVE CANCELLATION INVALID IF NOT PROPOSED IN SCN & REASONS NOT RECORDED

ISSUE

Whether an order cancelling GST registration with retrospective effect is sustainable in law when the Show Cause Notice (SCN) did not propose such retrospective action, and the final order failed to record any reasons for choosing a retrospective date or addressing the assessee’s reply.

FACTS

The SCN: A Show Cause Notice was issued to the assessee alleging fraud, wilful misstatement, or suppression of facts.
The Reply: The assessee filed a reply and updated the authorities about a change in their registered address.
The Defect: Despite the assessee providing the new address, the authorities did not conduct a physical inspection at this new location to verify existence.
The Order: The Proper Officer passed an order cancelling the registration with retrospective effect.
Appellate Stage: The appeal filed by the assessee was dismissed on the technical ground of limitation (being time-barred).
Writ Petition: The assessee approached the High Court challenging the retrospective cancellation.

DECISION

SCN Deficiency: The Court observed that the Show Cause Notice did not contemplate or propose retrospective cancellation. It is a settled principle of natural justice that an assessee cannot be punished with a retrospective date (which denies ITC to buyers) without being put on specific notice.
Non-Speaking Order: The cancellation order was “absolutely silent” on the reasons for choosing the retrospective date.
Ignored Reply: The order failed to deal with any of the contentions raised by the assessee in their reply, particularly regarding the change of address.
Conclusion: Since the retrospective effect was not part of the SCN and the order was non-speaking, it could not be sustained.
Verdict: The cancellation order was set aside, and the registration was directed to be restored. [In Favour of Assessee]

KEY TAKEAWAYS

The “Retrospective” Defense: This is a standard winning argument in GST writ petitions. If your registration is cancelled from 2017 (Day 1) but the SCN only said “Show cause why registration shouldn’t be cancelled,” the order is illegal. The SCN must specify the proposed date or intent to cancel retrospectively.
ITC Impact: Retrospective cancellation is dangerous because it destroys the Input Tax Credit (ITC) of all your customers for that past period. Fighting this is essential to protect your business relationships.
Speaking Order: An order that says “Reply not satisfactory” without explaining why is a non-speaking order and is liable to be quashed.

HIGH COURT OF DELHI

Modi Packers

Superintendent^*

PRATHIBA M. SINGH and SHAIL JAIN, JJ.

W.P.(C) No. 16684 OF 2025
CM APPL. No. 68463 OF 2025

DECEMBER 15, 2025

Nitin Gulati and Ms. Reena Gandhi, Advs. for the Petitioner. Ms. Anushree Narain, SSC, Naman Choula and Yamit Jetley, Advs. for the Respondent.

ORDER

Prathiba M. Singh, J. – This hearing has been done through hybrid mode.

2. The Petitioner has filed the present petition challenging the order-in-appeal dated 9th June, 2025 by which the appeal filed by the Petitioner challenging the order-in-original dated 27th May, 2023 has been dismissed on the ground of limitation.

3. The crux of the dispute is that the Petitioner raised a challenge to the order of retrospective cancellation of its GST registration dated 27th May, 2023. The said challenge was dismissed by the appellate authority solely on the ground that the appeal was barred by limitation.

4. The background of the case is that the Petitioner obtained his GST registration certificate, registered with effect from 1^st July, 2017, under the name M/s Modi Packers- a sole proprietary concern of Mr. Mohit Modi.

5. A show cause notice was issued to the Petitioner on 5^th April, 2023 (hereinafter, ‘the SCN’) calling upon the Petitioner to show cause as to why their GST registration ought not to be cancelled on the ground of fraud and wilful mis-statement or suppression of facts.

6. The Petitioner filed a reply to the SCN on 12^th April, 2023 and gave the proper registered address of the Petitioner concern, which had been earlier changed. The addresses of the Petitioner are:

OLD ADDRESS:

“Ground Floor, Plot No. 154/204, Near Raj Vatika, Village Pooth Khurd, Delhi, North West Delhi, Delhi – 110034″.

NEW ADDRESS:

“House No. 75&76, 2^nd Floor, Block F Pkt. 1 Sector 11, New Delhi, North West Delhi, Delhi – 110085.

7. In the reply dated 12th April, 2023, filed by the Petitioner to the SCN, the Petitioner provided its operational address, however, no physical inspection was conducted at the new address. Thereafter, the impugned cancellation of GST Registration order was passed on 27^th May, 2023 without giving any reference or consideration to the averments made in the reply filed by the Petitioner to the SCN.

8. The order of cancellation dated 27^th May, 2023, in fact, cancelled the GST Registration of the Petitioner retrospectively, i.e. from 3^rd July, 2017.

9. Thus, the Petitioner filed an appeal against the said order of cancellation dated 27^th May, 2023, but the same was dismissed on the ground of being barred by limitation.

10. It is the case of Mr. Nitin Gulati, ld. Counsel for the Petitioner, that an amended registration certificate had been issuedto the Petitioner, with the new address, on 28^th March, 2023 itself. Despite that, a physical inspection appears to have been conducted at the earlier address of the Petitioner and not at the new address, leading to the order of cancellation dated 27^th May, 2023. On a query from the Court, Mr. Nitin Gulati, ld. Counsel submits that the Petitioner is still in business and wishes to restore the GST registration number and is also willing to file the returns and any late fees/penalty. He further submits that the show cause notice dated 5th April, 2023 which led to the order of cancellation dated 27th May, 2023, did not contemplate retrospective cancellation of the GST registration. However, despite that, the GST Registration of the Petitioner has been cancelled retrospectively.

11. Ms. Anushree Narain, ld. Counsel for the Respondent, submits that though the retrospective cancellation of GST Registration of the Petitioner was not contemplated in the SCN, however, there appears to be some lapse in the passing of the reasoned order of cancellation dated 27th May, 2023 and the challenge thereto by the Petitioner in the form of an appeal.

12. The Court has considered the matter. The order of cancellation dated 27th May, 2023 is absolutely silent upon the reasons for retrospective cancellation of the GST Registration of the Petitioner. Moreover, the SCN does not contemplate retrospective cancellation at all. In addition to that, the order of cancellation does not deal with any of the contentions of the Petitioner in the reply filed to the SCN.

13. The retrospective cancellation having not been mentioned in the SCN, the same cannot be given effect retrospectively by way of the impugned order for cancellation. This position has been reiterated by this Court in various decisions including in Subhana Fashion v. Commissioner Delhi Goods and Service Tax (Delhi)/W.P. (C) 12255/2024)’, Balaji Industries (Vipin Kumar) v. Principal Commissioner CGST Delhi North Commissionerate GST 383 (Delhi)/(W.P.(C) 11913/2024)’ and Ridhi Sidhi Granite and Tiles v. State of U.P. GSTL 130 (Allahabad)/(W.P.(C) 8061/2024)’.

14. Under these circumstances, the order of cancellation dated 27th May, 2023 cannot sustain. The impugned cancellation order is accordingly set aside and the GST registration of the Petitioner is restored, in the following terms:

The Petitioner shall be given access to the GST portal within one week.

ii.

By 15^th January, 2026, the Petitioner shall file all its up to date returns along with the late fees, penalty, etc., if any.

iii.

If the Department wishes to take any action against the Petitioner in respect of any other violation, the Department is free to do so.

iv.

The latest contact details of the Petitioner are as under:

Email ID: modipackers79@gmail.com

Mobile: 9996449179

15. The said contact details shall also be updated by the Petitioner on the GST portal, so that the Department can conduct a fresh inspection, if so required.

16. The Petition is disposed of in these terms. Pending applications, if any, are also disposed of.