Facts of the Case

The petitioner, Ramar Andavar, filed a writ petition under Article 226 of the Constitution of India challenging the respondent’s order bearing Reference No. ZA3305221035161 dated 25.05.2022. The petitioner sought quashing of the cancellation order and a direction to the respondent to revoke the cancellation of GST Registration No. 33BMFPA8619B1ZK.

The petitioner’s GST registration was cancelled on the ground that monthly Goods and Services Tax returns had not been filed for a continuous period of six months. Consequently, the Registration Certificate was cancelled with effect from 31.12.2021 in view of Section 29 of the Central Goods and Services Tax Act, 2017.

The petitioner explained that the monthly GST returns could not be filed due to health issues. The respondent thereafter cancelled the GST registration by order dated 25.05.2022. The petitioner was also unable to file an application for revocation of cancellation within the prescribed time.

The petitioner relied upon the decision in Tvl. Suguna Cutpiece vs The Appellate Deputy Commissioner (ST) (GST) and Others, W.P. Nos. 25048, 25877, 12738 of 2021 etc. batch, dated 31.01.2022, in which relief had been granted in comparable circumstances subject to specified conditions.

Issues Involved

The principal issues before the High Court were:

  1. Whether the petitioner could be granted relief against cancellation of GST registration under Section 29 of the CGST Act where monthly GST returns had not been filed continuously for six months.
  2. Whether the petitioner’s inability to file GST returns due to health issues and failure to apply for revocation within time justified extension of the relief granted in similar cases.
  3. Whether the principles and conditional relief laid down in Tvl. Suguna Cutpiece vs The Appellate Deputy Commissioner (ST) (GST) and Others should also be extended to the petitioner.
  4. Whether GST registration could be revived subject to filing pending returns, payment of tax, interest, fine and fee, and restrictions concerning utilisation of Input Tax Credit.

Petitioner’s Arguments

The petitioner submitted that the monthly GST returns could not be filed due to health issues.

It was contended that, because of the non-filing of returns, the respondent cancelled the petitioner’s GST registration through the order dated 25.05.2022.

The petitioner further submitted that an application for revocation of cancellation could not be filed within the prescribed time.

Reliance was placed upon Tvl. Suguna Cutpiece vs The Appellate Deputy Commissioner (ST) (GST) and Others, where the Madras High Court had issued comprehensive directions permitting revival of cancelled GST registrations subject to compliance with specified conditions.

The petitioner sought the same benefit because the factual circumstances were stated to be identical or substantially similar.

Respondent’s Arguments

The respondent was represented by the learned Additional Government Pleader.

The judgment records that the GST registration had been cancelled because the petitioner failed to file monthly GST returns continuously for six months, attracting cancellation under Section 29 of the CGST Act.

Significantly, while considering the earlier line of decisions, the High Court observed that the Revenue/Department had accepted the view adopted in the Suguna Cutpiece line of cases, as evidenced by the fact that no appeal had been filed in any of those matters referred to by the Court.

Accordingly, the Court considered it appropriate to consistently follow the earlier judicial approach.

Court Order / Findings

The Madras High Court observed that it had consistently followed the directions issued in Tvl. Suguna Cutpiece vs Appellate Deputy Commissioner (ST) (GST) and Others.

The Court specifically referred to the following decisions in which the same approach had been followed:

  • M/s. Maaruthi Foundations Private Limited vs Deputy Commissioner (ST) (FAC), reported in 2022 (5) TMI 405;
  • J. Jayakrishnan vs The 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;
  • M/s. Pearl and Company vs The Commissioner of Commercial Taxes, W.P.(MD) No. 19127 of 2022.

The High Court further recorded that the Revenue/Department had accepted the view taken in those matters, as no appeal had been filed.

Accordingly, the Court held that the benefit extended in the earlier orders, particularly the Suguna Cutpiece case, should also be extended to the petitioner.

The writ petition was therefore ordered on the same terms as those contained in paragraph 229 of the Suguna Cutpiece judgment. No costs were awarded.

Conditions Governing Revival of GST Registration

In applying paragraph 229 of the Suguna Cutpiece decision, the Court extended relief subject to the following substantive conditions:

  1. The petitioner must file returns for the period prior to cancellation, if not already filed, together with unpaid tax, interest for belated payment, and applicable fine and fee for delayed filing, within 45 days from receipt of the order, where such amounts have not already been paid.
  2. Payment of tax, interest, fine or fee cannot be made or adjusted from unutilised or unclaimed Input Tax Credit lying with the petitioner.
  3. Any available Input Tax Credit cannot be utilised until it is scrutinised and approved by the appropriate or competent departmental officer.
  4. Only approved Input Tax Credit may thereafter be utilised for discharge of future tax liability under the Act and Rules.
  5. For the period subsequent to cancellation, the petitioner must file GST returns declaring the correct value of supplies, and 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 another competent authority.
  7. The Department may impose appropriate restrictions or limitations to prevent undue passing of Input Tax Credit and to ensure that the relief is not misused for bill trading.
  8. Upon payment of tax and penalty and uploading of returns, the registration shall stand revived forthwith.
  9. The respondents were required to take suitable steps, including instructing the GST Network, New Delhi, to make necessary changes in the GST web portal architecture to enable filing of returns and payment of tax, penalty and fine.
  10. The prescribed exercise was to be completed within 30 days from receipt of a copy of the relevant order.

These conditions are expressly reproduced in the uploaded judgment, including on pages 3 to 5; the rendered page 4 particularly sets out the restrictions on ITC utilisation, cash payment of post-cancellation GST liabilities, prevention of undue passing of ITC and revival upon compliance.

Important Clarification

The judgment is significant because the High Court did not treat cancellation of GST registration for six months’ continuous non-filing as necessarily preventing restoration in circumstances where the taxpayer had failed to seek revocation within time.

The relief was not unconditional. Revival was linked to strict compliance with filing obligations, payment of tax and associated statutory amounts, cash-payment requirements, scrutiny of Input Tax Credit and safeguards against misuse or bill trading.

A particularly important aspect is the Court’s observation that the Suguna Cutpiece approach had been consistently followed and that the Revenue/Department had accepted that view, as reflected by the absence of appeals in the matters referred to by the Court.

Thus, the ruling supports restoration of GST registration in appropriate cases while simultaneously protecting revenue interests through compliance conditions and controlled utilisation of Input Tax Credit.

Sections / Legal Provisions Involved

Section 29 of the Central Goods and Services Tax Act, 2017 — Relevant to cancellation of GST registration. In the present matter, the registration was cancelled after continuous failure to file monthly GST returns for six months.

Article 226 of the Constitution of India — The petitioner invoked the writ jurisdiction of the High Court and sought a Writ of Certiorarified Mandamus for quashing the cancellation order and directing revocation of cancellation.

GST Return Compliance Provisions — The relief granted was expressly conditioned upon filing pending returns and discharging tax, interest, fine and fee liabilities.

Input Tax Credit Provisions under the GST framework — The Court imposed restrictions on utilisation of unutilised, unclaimed or earned ITC until scrutiny and approval by the competent authority.

Link to download the order-https://mytaxexpert.co.in/uploads/1783160070_885compressed.pdf

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