Facts of the Case

Kanavaipatty Panchayat, represented by its Special Officer/BDO P. Kamaraj, approached the Madurai Bench of the Madras High Court by filing a writ petition under Article 226 of the Constitution of India.

The petitioner sought issuance of a Writ of Certiorarified Mandamus to call for the records relating to the respondent’s order bearing Reference No. ZA330725215372S dated 21.07.2025, quash the same as illegal and arbitrary, and direct the respondent to revoke the cancellation of the petitioner’s GST registration within such time as may be directed by the Court.

When the matter came up for hearing, both the learned counsel were ad idem that the issue was covered by the earlier judgment of the Madras High Court in Tvl. Suguna Cutpiece Center vs The Appellate Deputy Commissioner (ST) (GST), Salem and Erode, rendered in W.P. Nos.25048 of 2021 etc. batch cases.

Accordingly, the High Court considered the operative directions contained in paragraph 229 of the Suguna Cutpiece Center judgment and disposed of the present writ petition on the same terms.

Issues Involved

The principal issues arising in the matter were:

  1. Whether the GST registration cancellation order dated 21.07.2025 was liable to be set aside in exercise of writ jurisdiction under Article 226 of the Constitution of India.
  2. Whether the petitioner was entitled to revival of its cancelled GST registration.
  3. Whether the dispute was directly covered by the principles and conditional relief granted in Tvl. Suguna Cutpiece Center vs The Appellate Deputy Commissioner (ST) (GST), Salem and Erode.
  4. Whether revival of GST registration could be granted subject to filing pending returns and payment of tax, interest, fine/fee and other applicable amounts.
  5. Whether unutilized, unclaimed or earned Input Tax Credit could be used immediately, or only after scrutiny and approval by the competent GST authority.

Petitioner’s Arguments

The petitioner challenged the cancellation order dated 21.07.2025 and sought restoration of its GST registration.

The petitioner’s case, as reflected in the relief sought before the Court, was that the impugned cancellation order should be quashed and the respondent should be directed to revoke the cancellation of GST registration.

At the hearing, learned counsel for the petitioner agreed that the matter was covered by the judgment in Tvl. Suguna Cutpiece Center vs The Appellate Deputy Commissioner (ST) (GST), Salem and Erode.

Therefore, the petitioner sought the benefit of the same legal framework and conditional relief applicable to restoration of cancelled GST registrations.

Respondent’s Arguments

The respondent was represented by the learned Government Standing Counsel.

At the hearing, both learned counsel were ad idem that the matter was covered by the judgment in Tvl. Suguna Cutpiece Center vs The Appellate Deputy Commissioner (ST) (GST), Salem and Erode.

Thus, the respondent’s side also accepted the applicability of the earlier judgment to the present dispute.

Court Order / Findings

The Madras High Court recorded that both sides agreed that the matter was covered by the earlier decision in Tvl. Suguna Cutpiece Center vs The Appellate Deputy Commissioner (ST) (GST), Salem and Erode.

In view of the same, the High Court set aside the impugned order dated 21.07.2025 and allowed the writ petition on the same terms as the conditions extracted from paragraph 229 of the Suguna Cutpiece Center judgment.

The conditions governing the relief are as follows:

  1. Pending Returns Before Cancellation:
    The petitioner is required to file returns for the period prior to cancellation of registration, if such returns have not already been filed, together with the defaulted tax that remained unpaid prior to cancellation, along with interest for belated payment of tax and the fine and fee fixed for belated filing of returns for the defaulted period, within 45 days from the date of receipt of a copy of the order, if not already paid.
  2. No Adjustment from Input Tax Credit:
    Payment of tax, interest, fine/fee and other applicable amounts shall not be made or adjusted out of Input Tax Credit lying unutilized or unclaimed in the hands of the petitioner.
  3. Restriction on Existing Input Tax Credit:
    Any Input Tax Credit remaining available cannot be utilized until it is scrutinized and approved by the appropriate or competent officer of the Department.
  4. Use of Approved ITC:
    Only such Input Tax Credit as is approved after scrutiny shall be permitted to be utilized thereafter for discharging future tax liability under the applicable Act and Rules.
  5. Post-Cancellation Period Compliance:
    The petitioner is also required to pay GST and file returns for the period subsequent to cancellation of registration by declaring the correct value of supplies. Such GST payment is required to be made in cash.
  6. ITC Earned During the Relevant Period:
    If any Input Tax Credit was earned, it may be utilized only after scrutiny and approval by the respondents or any other competent authority.
  7. Departmental Restrictions to Prevent ITC Misuse:
    The respondents may impose such restrictions or limitations as may be warranted to prevent undue passing of Input Tax Credit pending scrutiny and to ensure that there is no violation or attempt at bill trading by taking advantage of the order.
  8. Revival of Registration:
    Upon payment of tax and penalty and uploading of returns, the GST registration shall stand revived forthwith.
  9. GST Portal Enablement:
    The respondents are required to take suitable steps by instructing GST Network, New Delhi, to make suitable changes in the GST web portal architecture so as to permit filing of returns and payment of tax, penalty and fine.
  10. Time Limit for Departmental Exercise:
    The required exercise is to be carried out by the respondents within 30 days from the date of receipt of a copy of the order.
  11. Costs:
    The High Court ordered no costs.

Important Clarification

The judgment does not grant unconditional restoration of GST registration. The relief is expressly governed by the conditions adopted from the earlier judgment in Tvl. Suguna Cutpiece Center vs The Appellate Deputy Commissioner (ST) (GST), Salem and Erode.

A particularly important clarification is that:

  • tax, interest, fine/fee and other applicable amounts cannot be paid or adjusted from unutilized or unclaimed ITC;
  • GST liability for the post-cancellation period is required to be discharged in cash;
  • ITC cannot be utilized until scrutiny and approval by the competent authority;
  • only approved ITC can subsequently be utilized for future tax liabilities;
  • the Department may impose restrictions to prevent undue passing of ITC or bill trading; and
  • upon compliance involving payment of tax and penalty and uploading of returns, registration shall stand revived forthwith.

The ruling therefore balances restoration of GST registration with strict tax-compliance safeguards and ITC scrutiny.

Sections / Legal Provisions Involved

  • Article 226 of the Constitution of India – Writ jurisdiction of the High Court.
  • GST statutory framework relating to cancellation and revival of registration – The dispute concerns cancellation and restoration/revival of GST registration.
  • GST provisions governing filing of returns – Relevant to pending returns for periods before and after cancellation.
  • GST provisions governing payment of tax and interest – Relevant to defaulted tax and belated payment.
  • GST provisions governing fine/fee for delayed filing of returns – Applicable to defaulted return periods.
  • Input Tax Credit provisions under the GST law and Rules – Relevant to scrutiny, approval and restricted utilization of ITC.

Important Note on Section Citation: The operative order itself does not expressly identify a specific CGST/TNGST section number for cancellation or revocation. Therefore, no specific statutory section number should be attributed to the Court beyond what is expressly recorded in the judgment. The writ petition was expressly filed under Article 226 of the Constitution of India.

Link to download the order -

https://mytaxexpert.co.in/uploads/1783065928_373compressed.pdf 

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