Facts of the Case

Bhuvan Constructions, represented by its proprietor Sri Obaiah Siddaiah, challenged the cancellation of its Goods and Services Tax registration. The GST registration had been cancelled by the second respondent through an order dated 27.03.2024 because the petitioner had failed to file GST returns for six consecutive months.

The petitioner also challenged the subsequent order concerning revocation of the cancelled GST registration dated 30.07.2024 and the appellate order dated 30.11.2024. The appeal against the cancellation was rejected on the ground of limitation.

The writ petition was filed under Articles 226 and 227 of the Constitution of India seeking, inter alia, quashing of the appellate order passed under Section 107 of the KGST and CGST Act, 2017, the order cancelling the GST registration, and the order concerning revocation of the cancelled registration.

Issues Involved

  1. Whether cancellation of GST registration for failure to file returns for six consecutive months should continue when the assessee expresses willingness to file all up-to-date returns and discharge the entire liability towards tax, interest and penalty.
  2. Whether the GST registration can be restored notwithstanding rejection of the statutory appeal on the ground of limitation.
  3. Whether the competent authority should revoke cancellation of registration once the petitioner files up-to-date returns and offers all taxes, interest and penalty, subject to due verification.
  4. Whether relief under Articles 226 and 227 of the Constitution of India can be granted in circumstances where the assessee seeks an opportunity to regularise GST compliance.

Petitioner’s Arguments

The petitioner, through learned counsel, submitted that it was willing to file all pending and up-to-date GST returns and offer the taxes, interest and payment due.

The petitioner sought relief against the cancellation of GST registration, the order relating to revocation of the cancelled registration, and the appellate order whereby the appeal had been rejected on limitation.

The principal submission before the Court was that the petitioner should be permitted to regularise its statutory compliance by filing the required returns and discharging the applicable tax, interest and penalty liabilities.

Respondents’ Arguments

The respondents were represented by learned Standing Counsel. Upon hearing both sides, it transpired from the submissions before the Court that there would be no impediment for an assessee to file the returns and offer taxes, interest and penalty.

The Court accordingly considered whether restoration of registration could follow upon complete compliance by the petitioner, subject to verification by the competent authority.

Court Order / Findings

The High Court observed that if the petitioner files up-to-date returns and offers all taxes, interest and penalty, subject to all due verification, the decision cancelling the GST registration must be revoked.

The Court specifically recorded that its consistent view has been to permit an assessee to:

  • file up-to-date GST returns;
  • offer/pay the applicable taxes;
  • discharge interest liability;
  • discharge penalty liability; and
  • seek revocation of cancellation of registration, subject to all just verification.

Accordingly, the writ petition was allowed in part.

The petitioner was granted liberty to file up-to-date returns and offer taxes, interest and penalty within a period of four weeks from the date of the order.

The second respondent was called upon to revoke the cancellation of GST registration if the petitioner files up-to-date returns and offers all taxes together with interest and penalty, subject to all just verification.

Important Clarification

The judgment does not grant unconditional or automatic restoration of GST registration merely because the assessee approaches the High Court.

The revocation of cancellation is conditional upon:

  • filing of up-to-date GST returns;
  • offering/discharging all applicable taxes;
  • payment of applicable interest;
  • payment of applicable penalty; and
  • due and just verification by the competent authority.

The decision is particularly significant where GST registration has been cancelled because of non-filing of returns for six consecutive months and the statutory appeal has subsequently been rejected on limitation. The High Court recognised an opportunity for the assessee to regularise compliance and directed revocation upon fulfilment of the stated conditions, subject to verification.

The Court further recorded its consistent view that an assessee may be permitted to file up-to-date returns, offer taxes, interest and penalty, with revocation of registration following subject to just verification.

Sections

  • Section 107 of the Central Goods and Services Tax Act, 2017 (CGST Act) – Appeals to Appellate Authority.
  • Section 107 of the Karnataka Goods and Services Tax Act, 2017 (KGST Act) – Statutory appellate remedy.
  • Articles 226 and 227 of the Constitution of India – Writ and supervisory jurisdiction of the High Court.
  • GST statutory framework relating to cancellation and revocation of registration for non-filing of returns – Relevant to the cancellation of registration and restoration upon compliance.

Link to download the order -
https://www.mytaxexpert.co.in/uploads/1783067086_415compressed.pdf

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.