R. Trading Co. v. Commissioner of Delhi Goods and Services Tax (Delhi High Court)

R. Trading Co. v. Commissioner of Delhi Goods and Services Tax :

In the case of R. Trading Co. v. Commissioner of Delhi Goods and Services Tax, the Delhi High Court addressed the issue of retrospective cancellation of GST registration for a deceased sole proprietor. The court ruled that GST registration cannot be cancelled retrospectively without valid reasons. It found no evidence of non-compliance by the deceased proprietor during their lifetime. Therefore, the court ordered that the cancellation should only be effective from the date of the proprietor’s death, not earlier.

For instance, R. Trading Co. operated under a sole proprietor who passed away. GST authorities sought to cancel the registration dating back several years, alleging non-compliance. However, the court reviewed the facts and determined there was no substantial basis for these claims. It stressed that any cancellation must be substantiated by concrete evidence of non-compliance, not just the absence of return filings. Retroactive cancellation could unfairly impact the company’s customers by affecting their ability to claim Input Tax Credit (ITC) for transactions during the disputed period.

This case highlights the significance of procedural fairness and adherence to legal principles in tax matters, especially concerning retrospective actions against deceased individuals under GST laws. The court’s decision aimed to safeguard the rights of the deceased taxpayer and uphold fairness in tax administration by requiring substantial grounds for such regulatory actions.