The Delhi High Court upheld an ADT‑01 audit notice for July 2017 to March 2021 though registration was later cancelled from 31 Dec 2019, and also refused relief for non-disclosure in an earlier writ.
Where registration existed and had not been cancelled during the period proposed for audit, a later cancellation with retrospective effect does not take that period outside Section 65 of the CGST Act, even for the months after the cancellation date [Oyster Steel and Iron Pvt. Ltd. v. Assistant Commissioner, Circle VII, Group 61, CGST Audit I, 2026-juristway.com-3205-HC(Delhi)-GST].
Justice Anil Kshetarpal wrote the judgment for a Division Bench that included Justice Bharat Parashar.
The petitioner, registered in July 2017, applied on 11 Jan 2020 to cancel its registration from 31 Dec 2019. While that application lay pending, an audit notice in ADT‑01 dated 15 Sep 2022 covered 1 Jul 2017 to 31 Mar 2021. In an earlier writ petition, the Court on 4 May 2023 directed cancellation from 31 Dec 2019 and treated later returns as void. The petitioner had replied to the audit notice a day earlier but did not disclose it in that case.
The petitioner argued that Section 65 permits audit only of a “registered person”, relying on Tvl. Raja Stores v. Assistant Commissioner (ST) (MANU/TN/6752/2023) and the Model All India GST Audit Manual, 2023. The department relied on Section 29(3) and on L.J. Victoria Properties Private Limited v. Union of India (2024:BHC-OS:18689-DB) and Ashoka Fabricast Private Limited v. Union of India (2024:RJ-JP:20409-DB).
The Court noted that a pending cancellation application only suspends registration under Rule 21A(1), and Rule 21A(3) still describes such a person as a registered person. Reading Section 65 with Section 2(13), it held that “An audit under the Act looks backwards”: it examines records, returns, credits and refunds already in existence.
Retrospective cancellation fixes the legal effect of the registration from the chosen date. “It does not, however, erase the historical fact that registration had been granted or that acts may have been undertaken under it.” Section 29(3) does not answer the question, and the power comes from Sections 2(13) and 65 read with Rule 101.
The Court respectfully declined to follow Tvl. Raja Stores. It treated the Audit Manual as departmental guidance that cannot define the statutory power.
The Court added that treating returns as void does not erase the underlying records, and that an audit does not itself determine tax liability. Nothing in the judgment lets the department treat the post-2019 returns as valid or assume that supplies were made in that period.
Relief was refused on a further ground: the petitioner did not disclose the audit notice in its earlier petition, yet relied on directions obtained there to attack that very notice. The department may seek modification of the order dated 4 May 2023.
The petition was dismissed and the interim stay of 5 Dec 2023 vacated.
2026-juristway.com-3205-HC(Delhi)-GST
