Facts of the Case

The petitioner, M/s Valentine Events, was a registered taxable person under the CGST Act, 2017. The GST authorities issued a show cause notice alleging that the petitioner had failed to file monthly GST returns for six consecutive months. Although the petitioner submitted a reply to the show cause notice, the proper officer found the explanation unsatisfactory and cancelled the GST registration under Section 29(2)(c) of the CGST Act.

The petitioner challenged the cancellation order before the Appellate Authority. However, the appeal was dismissed solely on the ground that it had been filed beyond the prescribed limitation period. Since the GST Appellate Tribunal under Section 109 had not been constituted in the State of Telangana, the petitioner approached the High Court by filing the present writ petition seeking restoration of the GST registration.

 

Issues Involved

  1. Whether cancellation of GST registration for non-filing of returns should be sustained despite the petitioner seeking restoration.
  2. Whether the High Court could exercise its writ jurisdiction when the GST Appellate Tribunal had not been constituted.
  3. Whether the petitioner deserved one more opportunity to explain the default and seek restoration of GST registration.

 

Petitioner's Arguments

  • The petitioner contended that the cancellation of GST registration was arbitrary and violative of the principles of natural justice.
  • It was argued that although a reply to the show cause notice had been submitted, the authorities failed to properly consider the explanation.
  • The petitioner submitted that the appellate remedy became ineffective because the GST Appellate Tribunal had not been constituted in Telangana.
  • The petitioner requested that the cancellation order be set aside and an opportunity be granted to file pending GST returns and comply with statutory requirements.

 

Respondent's Arguments

  • The GST Department submitted that the petitioner had continuously failed to file GST returns for six consecutive months.
  • The proper officer had lawfully exercised powers under Section 29(2)(c) of the CGST Act after issuing a show cause notice and considering the reply.
  • The appellate authority rightly dismissed the appeal since it had been filed beyond the statutory limitation period.

 

Court Order / Findings

The Telangana High Court observed that the issue involved in the present writ petition had already been decided in several earlier cases, including Nithya Constructions v. Union of India (W.P. No. 27449 of 2022).

Following the principle of parity, the Court held that since the dispute related to cancellation of GST registration, the petitioner deserved one more opportunity to regularize the default.

Accordingly, the High Court:

  • Set aside the cancellation order dated 29.12.2020.
  • Set aside the appellate order dated 25.10.2022.
  • Remanded the matter to the proper officer for fresh adjudication.
  • Directed the authority to provide adequate opportunity of hearing before passing a fresh order.
  • Clarified that during the proceedings, the petitioner would be at liberty to submit all pending GST returns in accordance with the statute.
  • Disposed of the writ petition without costs.

 

Important Clarification

  • Cancellation of GST registration for non-filing of returns is not always final where the taxpayer seeks restoration and is willing to comply with statutory requirements.
  • Where the GST Appellate Tribunal is not constituted, the High Court may entertain a writ petition under Article 226.
  • Courts have consistently adopted a liberal approach by granting one more opportunity to genuine taxpayers to regularize pending returns.
  • Authorities must ensure compliance with the principles of natural justice before finally deciding cancellation matters.
  • The judgment follows the precedent laid down in Nithya Constructions v. Union of India, granting relief by remanding the matter for fresh consideration.

Sections Involved

  • Section 29(2)(c) of the Central Goods and Services Tax Act, 2017
  • Section 107 of the CGST Act, 2017 (Appeal)
  • Section 109 of the CGST Act, 2017 (GST Appellate Tribunal)
  • Article 226 of the Constitution of India

 

Link to download the order -https://www.mytaxexpert.co.in/uploads/1782889038_154compressed.pdf

 

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