Facts of the Case

The petitioner, Jeyamani Raj, Proprietor of M/s. Pearl Enterprises, was a registered person under GST.

The petitioner had failed to file GSTR returns for a period of six months. Consequently, the second respondent, namely the State Tax Officer (ST), Ettayapuram Assessment Circle, cancelled the petitioner’s GST registration by order dated 30.12.2021.

The petitioner approached the Madras High Court seeking quashing of the cancellation order and a direction to the respondents to revoke the cancellation and restore the GST registration.

The petitioner’s case was that the failure to furnish returns for six months occurred due to ill-health. It was further submitted that, for the same reason, the petitioner was unable to file an appeal against the cancellation order within the time stipulated under the GST law.

The petitioner relied upon the decision of the Madras High Court in Tvl. Suguna Cutpiece vs The Appellate Deputy Commissioner (ST) (GST) and Others, decided on 31.01.2022, wherein detailed conditional directions had been issued for revival of GST registrations in comparable circumstances.

The petitioner also referred to subsequent decisions in which the Madras High Court had consistently followed the principles and directions laid down in the Suguna Cutpiece case.

Issues Involved

The principal issues involved before the Court were:

  1. Whether the petitioner, whose GST registration had been cancelled due to non-filing of returns for six months, could be granted relief under Article 226 of the Constitution of India.
  2. Whether the petitioner could be permitted to secure revival of the cancelled GST registration despite failure to file an appeal within the statutory period.
  3. 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.
  4. Whether restoration of registration could be permitted subject to payment of tax, interest, fine or fee, filing of pending returns and compliance with restrictions relating to Input Tax Credit.

Petitioner’s Arguments

The petitioner submitted that the GST returns could not be furnished for a period of six months due to ill-health.

It was contended that the same circumstances also prevented the petitioner from filing an appeal against the cancellation order within the time prescribed under the GST law.

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.

The petitioner submitted that, in identical circumstances, the High Court had permitted restoration of GST registration subject to specified conditions concerning:

  • filing of pending returns;
  • payment of defaulted tax;
  • payment of interest;
  • payment of applicable fine and fee;
  • cash payment requirements;
  • scrutiny and approval of Input Tax Credit; and
  • restrictions necessary to prevent undue passing of Input Tax Credit or bill trading.

The petitioner further relied upon subsequent decisions consistently following the Suguna Cutpiece ruling.

Respondents’ Position

The respondents were represented by the learned Government Advocate.

The Court specifically noted that the directions issued in the Suguna Cutpiece case had been consistently followed in various subsequent decisions.

Significantly, the Court also recorded that the Revenue/Department had accepted the said view, as evident from the fact that no appeal had been filed in any of the matters referred to by the Court.

In view of this consistent judicial approach and the Department’s acceptance of the position, the Court decided to follow the earlier order.

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 further observed that the Revenue/Department had accepted the said view, as evident from the fact that no appeal had been filed in any of the matters.

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

The writ petition was therefore ordered on the same terms mentioned in paragraph 229 of the Suguna Cutpiece order.

No costs were imposed, and the connected miscellaneous petition was also closed.

Important Clarification

This judgment does not grant unconditional restoration of GST registration merely because the taxpayer approaches the High Court after cancellation.

The relief was expressly extended on the same terms as paragraph 229 of the Suguna Cutpiece judgment. Therefore, restoration was linked with strict compliance obligations concerning:

  • filing of pending returns;
  • payment of tax;
  • payment of interest;
  • payment of applicable fine and fee;
  • cash payment requirements;
  • non-adjustment of specified dues against unutilised or unclaimed ITC;
  • scrutiny and approval of ITC before utilisation;
  • filing of post-cancellation period returns;
  • declaration of correct value of supplies; and
  • departmental safeguards against undue ITC passing and bill trading.

Another important aspect is that the petitioner had stated that ill-health caused the failure to file returns for six months and also prevented filing of the statutory appeal within time.

The Court’s decision was materially influenced by the consistent line of earlier Madras High Court decisions following Suguna Cutpiece, as well as the Court’s observation that the Revenue/Department had accepted that view, evidenced by the absence of appeals in the referred matters.

Sections / Legal Provisions Involved

Article 226 of the Constitution of India

The writ petition was expressly filed under Article 226 seeking issuance of a Writ of Certiorarified Mandamus to quash the GST registration cancellation order and direct restoration/revocation of cancellation.

Section 29(2)(c) of the CGST Act / Corresponding State GST Provision

Relevant to cancellation of registration where a registered person fails to furnish returns for the prescribed continuous tax periods. In the present matter, the factual basis recorded by the Court was non-filing of GSTR returns for six months.

Section 30 of the CGST Act / Corresponding State GST Provision

Relevant to revocation of cancellation of registration.

Section 107 of the CGST Act / Corresponding State GST Provision

Relevant in the context of statutory appeal and limitation, since the petitioner specifically submitted that an appeal against cancellation could not be filed within the time stipulated under the Act.

Relevant GST Rules

The procedural framework concerning cancellation and revocation of cancellation of registration, including the applicable provisions of the CGST Rules / corresponding State GST Rules, is relevant to the controversy.

Clarificatory Note: The judgment itself expressly records the writ jurisdiction under Article 226 and the factual basis of cancellation for non-filing of returns for six months. The statutory section references above identify the corresponding GST provisions governing cancellation, revocation and appeal relevant to the subject matter.

Link to download the order -https://www.mytaxexpert.co.in/uploads/1783490534_1384compressed.pdf

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