Temporary Suspension Of Business Activity On Account Of Ill Health Does Not Warrant Cancellation Of Taxpayer's GST Registration: Delhi HC

The Delhi High Court ruled that the retrospective cancellation of GST registration has a cascading effect, impacting the input tax credit (ITC) of other taxpayers. The case involved a taxpayer whose GST registration was cancelled retrospectively due to non-compliance. The court found that the cancellation order did not provide sufficient reasons and violated principles of natural justice. The court emphasized that retrospective cancellations disrupt the ITC chain, affecting businesses that have already claimed credits based on transactions with the deregistered taxpayer. This decision underscores the need for tax authorities to follow due process and provide clear justifications for retrospective actions, protecting the interests of compliant taxpayers.