Facts of the Case

M/s. M.S. Constructions, a partnership firm engaged in construction and allied activities, was registered under the Central Goods and Services Tax Act, 2017. The petitioner had obtained GST Registration No. 36ABIFM6847J1ZP through a registration certificate issued on 25.03.2020, with validity effective from 06.07.2018.

The Superintendent of Central Tax, Kukatpally Range, Medchal GST Commissionerate, issued a show cause notice dated 02.12.2021 calling upon the petitioner to explain why its GST registration should not be cancelled on the ground that it had failed to file GST returns for a continuous period of six months.

The petitioner submitted a reply on 02.01.2022. However, the competent authority passed an order dated 10.01.2022 cancelling the petitioner’s GST registration on the ground of failure to file GST returns for the preceding six months.

Aggrieved by the cancellation order, the petitioner preferred an appeal before the Joint Commissioner (Appeals-II), Hyderabad. The appellate authority, by Order-in-Appeal dated 18.10.2022, dismissed the petitioner’s appeal and thereby sustained the cancellation of GST registration.

The petitioner thereafter invoked the writ jurisdiction of the Telangana High Court under Article 226 of the Constitution of India, seeking quashing of both the original cancellation order dated 10.01.2022 and the appellate order dated 18.10.2022.

Issues Involved

The principal issues before the High Court were:

  1. Whether the cancellation of the petitioner’s GST registration for failure to file GST returns continuously for six months should be sustained in the facts and circumstances of the case.
  2. Whether the appellate order dismissing the petitioner’s challenge against cancellation of GST registration was liable to be set aside.
  3. Whether, in view of earlier orders passed by the Telangana High Court in similar matters, the dispute should be remanded to the primary authority for a fresh decision in accordance with law.
  4. Whether the petitioner should be granted an opportunity of hearing before a fresh decision is taken by the competent authority.
  5. Whether the petitioner could submit pending statutory GST returns, including returns relating to the earlier period, during the remand proceedings.

Petitioner’s Arguments

The petitioner challenged the order dated 10.01.2022 cancelling its GST registration as well as the appellate order dated 18.10.2022 confirming the cancellation.

The petitioner’s case, as reflected in the writ proceedings, was that the impugned action was arbitrary, illegal, unjust and unreasonable, contrary to the principles of natural justice, and violative of Articles 14, 19 and 21 of the Constitution of India.

The petitioner sought interference under Article 226 of the Constitution and requested the High Court to set aside the cancellation order and the order passed in appeal.

The petitioner’s challenge also proceeded on the basis that the matter required reconsideration in accordance with law and after affording an effective opportunity of hearing.

Respondents’ Arguments

The Union of India was represented before the Court through learned counsel, while respondents Nos. 2 to 4, being the concerned Central Tax/GST authorities, were separately represented.

The judgment records the appearance and hearing of counsel for the respondents. However, the operative order does not separately reproduce any detailed substantive counter-arguments advanced on their behalf. Therefore, no additional argument should be attributed to the respondents beyond what is expressly recorded in the judgment.

The administrative position underlying the impugned orders was that the petitioner’s GST registration had been cancelled because of failure to file GST returns for a continuous period of six months, and the statutory appeal against such cancellation had subsequently been dismissed.

Court Order / Findings

The Telangana High Court observed that the issue raised in the writ petition was “no more res integra.” The Court specifically noted that in several writ petitions raising similar grievances, it had already interfered with cancellation of GST registrations as well as the corresponding appellate orders and had remanded such matters to the primary authority for fresh decisions in accordance with law.

Following those earlier orders and maintaining consistency, the High Court:

  • set aside the GST registration cancellation order dated 10.01.2022;
  • set aside the Order-in-Appeal dated 18.10.2022;
  • remanded the matter to respondent No. 4, the primary authority, for a fresh decision in accordance with law;
  • directed that the petitioner be given an opportunity of hearing before a fresh decision is taken;
  • directed completion of the fresh exercise within three months from the date of receipt of a copy of the High Court’s order; and
  • clarified that, in the meantime, it would be open to the petitioner to submit all returns as per the statute, including returns for the earlier period.

The writ petition was accordingly disposed of. Pending miscellaneous applications, if any, were ordered to stand closed, with no order as to costs.

Important Clarification

The High Court did not direct unconditional or automatic permanent restoration of the petitioner’s GST registration on merits. Instead, it set aside the existing cancellation and appellate orders and remanded the matter to the primary authority for a fresh decision in accordance with law after granting an opportunity of hearing.

A further significant clarification is that the petitioner was expressly permitted, during the intervening period, to submit all statutory returns, including returns pertaining to the earlier period.

The judgment also makes clear that the Court followed its approach in several similar writ petitions and maintained consistency because the issue was regarded as no longer res integra. However, the order as reproduced does not identify by name or citation the earlier similar decisions. Accordingly, no unverified related case name or citation has been inserted.

Sections / Legal Provisions Involved

Article 226 of the Constitution of India – Writ jurisdiction of the High Court invoked to challenge the GST registration cancellation order and the appellate order.

Central Goods and Services Tax Act, 2017 – Governing GST enactment under which the petitioner was registered and under which statutory return compliance and cancellation proceedings arose.

Section 29 of the CGST Act, 2017 – Statutory framework concerning cancellation or suspension of GST registration; relevant to cancellation for prescribed non-compliance, including return-filing defaults.

Section 107 of the CGST Act, 2017 – Statutory appellate framework relevant to an appeal against an adjudicatory decision or order under the GST law.

Section 151 of the Code of Civil Procedure, 1908 – Referred to in I.A. No. 1 of 2022 seeking interim suspension of the impugned appellate/cancellation action pending disposal of the writ petition.

Articles 14, 19 and 21 of the Constitution of India – Invoked by the petitioner in challenging the impugned action as arbitrary, unreasonable and contrary to constitutional protections.

Principles of Natural Justice – Central to the High Court’s direction requiring an opportunity of hearing before the primary authority takes a fresh decision.

Link to download the order - https://mytaxexpert.co.in/uploads/1783321545_1304compressed.pdf

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