The Delhi High Court in the case of M/S. SANJAY SALES INDIA VERSUS PRINCIPAL COMMISSIONER OF DEPARTMENT OF TRADE AND TAXES, GOVERNMENT OF NCT OF DELHI vide W. P. (C) 10234/2024 and CM APPL. 41985/2024 dated 26.07.2024, held that cancellation of GST registration is independent of any pending liabilities, and the GST authorities can separately address tax dues or statutory violations even after the cancellation. Thus, the petitioner's application for cancellation was ordered to be processed. The court concluded that the grounds on which the GST authority sought to reject the cancellation request were not valid. 

Facts of the Case:  In this case, the petitioner claims that it discontinued its business and applied for the cancellation of its GST registration on 13.06.2024. However, the proper officer issued a notice on 16.07.2024, expressing dissatisfaction with the petitioner's application for cancellation. The Respondents provided two reasons i.e. Payment of due taxes and penalties and Submission of month-wise details of taxes paid, sales/purchase invoices, stock register, and bank statements since the date of registration. 

Held that: The Court observed as under:

First Ground (Payment of Due Taxes and Penalties):  this ground was not a valid reason to deny the petitioner's request for cancellation. Cancellation of the GST registration would not affect the petitioner’s liability to pay any outstanding taxes or penalties. Therefore, the officer’s demand that tax liabilities must be cleared before cancellation was found to be inappropriate.

Second Ground (Submission of Records): this requirement to be irrelevant for the purpose of GST registration cancellation. Any scrutiny of the petitioner’s tax liability for a prior period could not be a valid ground for refusing the request for cancellation. The petitioner's liabilities before the cancellation remain enforceable, and statutory violations could still be pursued separately.

The Court directed respondents to process the petitioner's application for cancellation of GST registration without considering the aforementioned grounds as barriers. The court clarified that this order would not preclude the Proper Officer from initiating proceedings in the future, if warranted, under relevant GST laws for the assessment or recovery of any dues from the petitioner for the period prior to the cancellation.

To read the complete judgment 2024 Taxo.online 1739