Facts of the Case

M/s Bright Asset Transit Private Limited filed a writ petition under Article 226 of the Constitution of India challenging the order bearing Reference No. ZA330422075318O dated 20.04.2022, whereby its GST registration was cancelled with effect from 01.04.2022.

The cancellation was made on the ground that the petitioner had failed to file Goods and Services Tax monthly returns for a continuous period of six months. The cancellation of the Registration Certificate was effected in view of Section 29 of the Central Goods and Services Tax Act.

The petitioner sought quashing of the cancellation order as illegal and arbitrary and requested a direction to the respondent to revoke the cancellation of GST Registration No. 33AAECB5364P1ZC.

Issues Involved

The principal issues before the Madras High Court were:

  1. Whether the petitioner could be granted relief against cancellation of GST registration for continuous non-filing of monthly returns for six months.
  2. Whether the benefit of the directions issued in Tvl. Suguna Cutpiece vs Appellate Deputy Commissioner (ST) (GST) and Others could be extended to the petitioner.
  3. Whether revival of GST registration could be permitted subject to payment of tax, interest, fine and fee and filing of pending returns.
  4. Whether relief could be granted where the petitioner was unable to pursue the statutory appellate remedy within the prescribed limitation period.

Petitioner’s Arguments

The petitioner submitted that it was unaware of the cancellation of its Registration Certificate because its Managing Director had been diagnosed with hernia, had undergone treatment and had remained on bed rest for several months.

During this period, the business was being carried on by the staff of the petitioner’s concern, while only a part-time accountant was looking after statutory compliances, including filing of GST returns.

The petitioner stated that it became aware of the cancellation of GST registration only after being informed by other-end taxpayers that its GSTIN registration stood cancelled.

Due to these circumstances, the petitioner was unable to file an appeal against the cancellation within the time stipulated under the Act.

The petitioner further relied upon the decision in Tvl. Suguna Cutpiece vs Appellate Deputy Commissioner (ST) (GST) and Others, W.P. Nos. 25048, 25877, 12738 of 2021 etc. batch, dated 31.01.2022, in which the Court had permitted revival of cancelled GST registrations subject to specified conditions.

The petitioner also referred to subsequent decisions consistently following the same approach, including:

  • M/s Maaruthi Foundations Private Limited vs Deputy Commissioner (ST) (FAC), reported in 2022 (5) TMI 405;
  • J. Jayakrishnan vs Additional Chief Secretary/Commissioner of Commercial Taxes, Chennai, reported in 2022 (7) TMI 1226;
  • TVL Jeyalakshmi Store represented by its Proprietor, Sivanu Pandian vs Commissioner of Commercial Taxes, reported in 2022 (7) TMI 1275; and
  • M/s Pearl and Company vs Commissioner of Commercial Taxes, W.P.(MD) No. 19127 of 2022.

Respondent’s Arguments

The learned Standing Counsel for the respondent submitted that the appellate authority could not pass orders disregarding the limitations prescribed under the statutory framework.

Accordingly, it was contended that no fault could be found with the rejection of the petitioner’s appeal because, admittedly, the appeal had been filed beyond the prescribed period of limitation.

Court Order / Findings

The Madras High Court observed that the benefit extended in its earlier orders, particularly in Tvl. Suguna Cutpiece vs Appellate Deputy Commissioner (ST) (GST) and Others, could also be extended to the petitioner.

The Court accordingly ordered the writ petition on the same terms as those contained in paragraph 229 of the order in the Suguna Cutpiece case.

The operative conditions included the following:

  1. The petitioner must file returns for the period prior to cancellation of registration, where such returns had not already been filed, together with the defaulted tax, interest for belated payment, and applicable fine and fee for delayed filing, within the stipulated period.
  2. Payment of tax, interest, fine, fee and other dues cannot be made or adjusted from unutilised or unclaimed Input Tax Credit lying with the petitioner.
  3. Any unutilised Input Tax Credit cannot be utilised until scrutinised and approved by the appropriate or competent officer of the Department.
  4. Only approved Input Tax Credit may thereafter be utilised for discharging future tax liability under the Act and Rules.
  5. GST must also be paid and returns filed for the period subsequent to cancellation by declaring the correct value of supplies, and such GST payment must be made in cash.
  6. Input Tax Credit earned during the relevant period may be utilised only after scrutiny and approval by the respondent or other competent authority.
  7. The authorities may impose appropriate restrictions or limitations to prevent undue passing of Input Tax Credit and to ensure that the benefit of the order is not misused for bill trading.
  8. Upon payment of tax, penalty and uploading of returns, the registration shall stand revived forthwith.
  9. The authorities must take suitable steps by instructing the GST Network, New Delhi, to make necessary changes in the GST portal architecture to enable filing of returns and payment of tax, penalty and fine.
  10. The required exercise must be carried out within the period directed under the governing precedent.

The writ petition was accordingly ordered. No costs were imposed, and the connected miscellaneous petition was closed.

Important Clarification

The judgment makes an important distinction between the statutory limitation governing appellate authorities and the constitutional writ jurisdiction exercised by the High Court.

The respondent’s submission was that the appellate authority could not disregard the prescribed limitation period, and the Court did not find fault with rejection of an appeal that was admittedly beyond limitation. Nevertheless, considering the earlier precedent in Tvl. Suguna Cutpiece vs Appellate Deputy Commissioner (ST) (GST) and Others, the High Court extended the same conditional benefit to the petitioner.

Therefore, the relief granted was not an unconditional waiver of statutory defaults. Revival of registration remained subject to compliance with the conditions relating to filing of pending returns, payment of tax and other applicable dues, cash payment requirements, scrutiny and approval of Input Tax Credit, and safeguards against undue passing of ITC or bill trading.

Sections Involved

Section 29 of the Central Goods and Services Tax Act, 2017 – Cancellation or suspension of registration; the petitioner’s GST registration was cancelled in view of this provision following continuous non-filing of monthly returns.

Article 226 of the Constitution of India – Constitutional provision under which the petitioner invoked the writ jurisdiction of the High Court seeking a Writ of Certiorarified Mandamus against the GST registration cancellation order.

Link to download the order -https://mytaxexpert.co.in/uploads/1783152419_861compressed.pdf

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