Facts of the Case

The petitioner, Muthu Subbuah Ayyadurai, was registered under GST bearing GSTIN No. 33AELPA2331M2ZR. The petitioner failed to furnish GST returns for a period of six months.

Consequently, the third respondent, namely the State Tax Officer (ST), Kovilpatti Assessment Circle, cancelled the petitioner’s GST registration by order dated 29.01.2022.

The petitioner stated that the failure to furnish returns for the relevant period occurred due to ill-health. Aggrieved by the cancellation of GST registration, the petitioner preferred an appeal before the second respondent, namely the Deputy Commissioner (ST), GST Appeal, Madurai & Tirunelveli.

However, the appeal was rejected by order dated 24.08.2022 as inadmissible.

The petitioner thereafter approached the Madurai Bench of the Madras High Court under Article 226 of the Constitution of India seeking quashing of the cancellation order dated 29.01.2022 and the appellate order dated 24.08.2022, along with a direction to the respondents to revoke the cancellation and restore the GST registration.

Issues Involved

  1. Whether the petitioner’s cancelled GST registration could be revived despite non-filing of GST returns for six months.
  2. Whether relief granted in identical circumstances in Tvl. Suguna Cutpiece vs Appellate Deputy Commissioner (ST) (GST) and Others could be extended to the petitioner.
  3. Whether rejection of the petitioner’s appeal as inadmissible prevented the High Court from granting relief under Article 226 of the Constitution of India.
  4. Whether revival of GST registration should be made subject to payment of outstanding tax, interest, fine and fee and filing of pending returns.
  5. Whether unutilised or unclaimed Input Tax Credit could be used for payment of liabilities relating to the defaulted period or post-cancellation period.

Petitioner’s Arguments

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

It was argued that the GST registration was consequently cancelled by the third respondent through the order dated 29.01.2022 and that the appeal preferred against the cancellation was rejected by the second respondent on 24.08.2022 as inadmissible.

The petitioner relied upon the decision of the Madras High Court 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.

It was submitted that, in identical circumstances, the High Court had permitted revival of cancelled GST registrations subject to specified conditions concerning filing of returns, payment of tax, interest, fine and fee, cash payment of GST and scrutiny of Input Tax Credit.

The petitioner therefore sought extension of the same benefit.

Respondent’s Arguments / Revenue’s Position

The respondents were represented by the learned Government Advocate.

The Court specifically noted that the directions issued in Tvl. Suguna Cutpiece vs Appellate Deputy Commissioner (ST) (GST) and Others had consistently been followed by the Madras High Court in various subsequent decisions.

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

Accordingly, the Court found it appropriate to follow the same settled course and extend similar relief to the petitioner.

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 also noted that the Revenue/Department had accepted the said view, as no appeal had been filed in any of the matters referred to before the Court.

In view of this consistent judicial approach, the Court held that the benefit extended in the earlier orders, particularly in the Suguna Cutpiece case, could also be extended to the petitioner.

Accordingly, the writ petition was ordered on the same terms as those contained in paragraph 229 of the order passed in the Suguna Cutpiece case.

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

Important Clarification

The judgment does not grant unconditional restoration of GST registration.

The revival is expressly linked to strict compliance with the conditions laid down in paragraph 229 of the Suguna Cutpiece judgment. The taxpayer must regularise pending GST compliances, file outstanding returns and discharge applicable tax, interest, fine and fee.

A particularly important clarification is that outstanding liabilities cannot be discharged by adjusting unutilised or unclaimed Input Tax Credit. Further, GST liability for the period subsequent to cancellation must also be paid in cash.

Any Input Tax Credit claimed or earned remains subject to scrutiny and approval by the competent authority before utilisation.

The Department also retains the authority to impose appropriate restrictions to prevent undue passing of Input Tax Credit and misuse through bill trading.

The judgment therefore balances restoration of GST registration and continuation of business activity with protection of revenue and verification of Input Tax Credit.

Sections / Legal Provisions Involved

Section 29 of the CGST Act, 2017 / corresponding TNGST Act provisions – Cancellation or suspension of GST registration, including cancellation arising from statutory defaults such as continuous non-filing of returns.

Section 30 of the CGST Act, 2017 / corresponding TNGST Act provisions – Revocation of cancellation of registration.

Section 107 of the CGST Act, 2017 / corresponding TNGST Act provisions – Appeal to the Appellate Authority; relevant in the context of the petitioner’s appeal having been rejected as inadmissible.

Article 226 of the Constitution of India – Constitutional writ jurisdiction invoked by the petitioner for quashing the cancellation and appellate orders and seeking restoration of GST registration.

Relevant GST Return Filing Provisions and Rules – Applicable to the obligation to furnish pending returns and regularise compliance defaults.

Input Tax Credit Provisions under the GST law – Relevant because the Court imposed restrictions on utilisation of unutilised, unclaimed or earned Input Tax Credit until scrutiny and approval by the competent authority.

Link to download the order -https://www.mytaxexpert.co.in/uploads/1783491511_1388compressed.pdf

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