Facts of the Case

The petitioner, M/s Sanctum Innovations and Solutions Pvt. Ltd., approached the Telangana High Court under Article 226 of the Constitution of India, challenging the cancellation of its GST registration and the subsequent appellate order confirming such cancellation.

As recorded in the order, the petitioner was engaged in the business of providing health club and fitness centre services and had obtained GST registration bearing Registration No. 36AAXCS9250J1ZH, under the GST regime introduced pursuant to the Central Goods and Services Tax Act, 2017 and related laws.

The GST authority issued a show cause notice dated 18.12.2021, calling upon the petitioner to explain why its GST registration should not be cancelled on the ground of non-filing of GST returns for six consecutive tax periods.

The petitioner submitted a reply on 29.12.2021. Nevertheless, the competent authority cancelled the GST registration by order dated 13.01.2022.

Aggrieved by the cancellation order, the petitioner preferred an appeal before the appellate authority. The appeal was rejected by Order-in-Appeal dated 18.08.2022, thereby upholding the cancellation of the petitioner’s GST registration.

The petitioner consequently invoked the writ jurisdiction of the Telangana High Court, seeking quashing of both the original cancellation order and the appellate order.

Issues Involved

The principal issues before the High Court were:

  1. Whether the cancellation of GST registration for alleged non-filing of GST returns for six consecutive tax periods should be sustained in the facts and circumstances of the case.
  2. Whether the original cancellation order dated 13.01.2022 and the appellate order dated 18.08.2022 deserved to be set aside where similar grievances had previously resulted in remand to the primary authority.
  3. Whether, on the principle of parity, the petitioner was entitled to reconsideration of the entire issue by the primary GST authority.
  4. Whether the petitioner should be granted a proper opportunity of hearing before a fresh decision was taken.
  5. Whether the petitioner could submit pending GST returns at the stage of fresh hearing before the primary authority.

Petitioner’s Arguments

The petitioner contended that the cancellation of its GST registration and the appellate confirmation thereof were unsustainable.

The principal submission recorded by the High Court was that, in writ petitions raising similar grievances, the Court had passed a series of orders remanding the matters back to the primary authority for fresh decision in accordance with law.

Accordingly, the petitioner sought similar treatment and relied upon the principle of parity, requesting that the impugned orders be set aside and the matter be restored to the primary authority for reconsideration.

The writ petition also challenged the impugned action as illegal, arbitrary and violative of the principles of natural justice, while seeking relief under Article 226 of the Constitution of India.

Respondents’ Arguments

The respondents were represented before the High Court. Respondent No.1 was represented through counsel appearing for the Union of India, while Respondent Nos.2 to 5 were represented by learned counsel for the GST authorities.

The order records that the Court heard the respective counsel. However, the judgment does not separately reproduce any detailed substantive counter-arguments advanced by the respondents on the merits of the cancellation.

Therefore, it would not be appropriate to attribute any additional or specific argument to the respondents beyond what is expressly recorded in the order.

Court Order / Findings

The Telangana High Court considered the circumstances and specifically applied the principle of parity.

The Court passed the following directions and findings:

  1. The order dated 13.01.2022 passed by Respondent No.5 cancelling the petitioner’s GST registration was set aside.
  2. The Order-in-Appeal dated 18.08.2022 passed by Respondent No.3 was also set aside.
  3. The entire matter was remanded back to Respondent No.5, the primary authority.
  4. Respondent No.5 was directed to consider the entire issue afresh.
  5. The authority was required to provide the petitioner a due opportunity of hearing.
  6. After granting such opportunity, the authority was directed to pass an appropriate order in accordance with law.
  7. The High Court expressly clarified that, at the time of hearing before Respondent No.5, the petitioner would be at liberty to submit all GST returns as per the statute.
  8. The writ petition was accordingly disposed of without costs.
  9. Pending miscellaneous petitions, if any, were also closed.

Important Clarification

A particularly significant clarification in the judgment is that the High Court did not directly order unconditional or automatic restoration of the GST registration.

Instead, the Court:

  • set aside the cancellation order;
  • set aside the appellate order;
  • remanded the entire issue to the primary authority;
  • directed fresh consideration after granting due opportunity of hearing; and
  • expressly permitted the petitioner to submit all GST returns as per the statute at the time of hearing.

Thus, the ratio and practical effect of the order should be understood as a remand for fresh statutory adjudication with procedural opportunity, rather than a final declaration that every GST cancellation for non-filing of returns is automatically invalid.

Another important point is that the Court relied upon the principle of parity, noting the petitioner’s submission that a series of orders had been passed in writ petitions involving similar grievances. However, the present order does not identify or cite by name any specific related case law or reported precedent. Therefore, no unmentioned case citation should be inserted into the case summary.

Sections / Legal Provisions Involved

·         Article 226 of the Constitution of India – Writ jurisdiction of the High Court under which the petitioner sought quashing of the GST cancellation order and appellate order.

·         Central Goods and Services Tax Act, 2017 – The governing GST enactment referred to in the judgment in the context of the petitioner’s GST registration and statutory compliance.

·         Non-filing of GST returns for six consecutive tax periods – The specific ground stated in the show cause notice for proposed cancellation of GST registration.

·         Section 151 of the Code of Civil Procedure, 1908 – Invoked in the interlocutory applications seeking interim relief, including permission/direction concerning filing of GST returns and suspension of the impugned orders during pendency of the writ petition.

·         Principles of Natural Justice – Relevant to the petitioner’s challenge and the High Court’s direction that a due opportunity of hearing be granted before fresh adjudication.

·         Principle of Parity – Expressly applied by the High Court while setting aside the impugned orders and remanding the matter for fresh consideration.

Link to download the order -

https://www.mytaxexpert.co.in/uploads/1783332299_1170compressed.pdf

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