Facts of the Case

  1. The petitioner, Rathinam Ashokkumar, was the proprietor of M/s Nammalvar Rice Mill and held GST Registration No. 33AISPA5315N1Z4.
  2. The petitioner failed to file GST returns for a period of six months.
  3. Consequently, the second respondent, the State Tax Officer (ST), Ettayapuram Assessment Circle, cancelled the petitioner’s GST registration by order dated 11 June 2019 bearing Reference No. ZA330619024501T.
  4. The petitioner stated that the rice mill was an ancestral property managed by him along with his uncle.
  5. According to the petitioner, due to the ill-health of his uncle, the petitioner could not furnish GST returns for more than six months.
  6. The petitioner was also unable to file an appeal against the cancellation order within the time stipulated under the GST law.
  7. The petitioner therefore approached the Madras High Court under Article 226 of the Constitution of India seeking a Writ of Certiorarified Mandamus to quash the cancellation order and direct restoration of the GST registration.

Issues Involved

  1. Whether the cancellation of GST registration for non-filing of returns for six months should continue where the registered person seeks restoration and is willing to comply with pending statutory obligations.
  2. Whether the petitioner could be granted relief despite failure to file a statutory appeal within the prescribed period against cancellation of GST registration.
  3. Whether the benefit and directions issued in Tvl. Suguna Cutpiece vs Appellate Deputy Commissioner (ST) (GST) and Others could be extended to the petitioner.
  4. Whether revival of GST registration could be permitted subject to filing pending returns and payment of tax, interest, fine and fee.
  5. Whether unutilised or unclaimed Input Tax Credit could be directly used for payment of tax, interest, fine or fee relating to the default period without departmental scrutiny and approval.
  6. Whether GST liability for the period subsequent to cancellation of registration was required to be discharged in cash while filing the relevant returns.

Petitioner’s Arguments

The petitioner submitted that:

  1. The rice mill was an ancestral property managed by the petitioner along with his uncle.
  2. Due to the ill-health of the petitioner’s uncle, the petitioner failed to furnish GST returns for more than six months.
  3. Owing to these circumstances, the petitioner was also unable to file an appeal within the statutory time limit against the cancellation of GST registration.
  4. In identical circumstances, the Madras High Court had already granted relief in Tvl. Suguna Cutpiece vs Appellate Deputy Commissioner (ST) (GST) and Others, W.P. Nos. 25048, 25877, 12738 of 2021 etc. batch, decided on 31 January 2022.
  5. The principles and directions laid down in the said batch judgment had consistently been followed in subsequent cases.
  6. Accordingly, the petitioner sought extension of the same benefit and restoration of GST registration subject to compliance with the conditions prescribed by the Court.

Respondents’ Arguments / Revenue 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 in various subsequent decisions.

The Court further observed that the Revenue/Department had accepted the said view, as evidenced by the fact that no appeal had been filed in any of those 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 and extend the same benefit to the petitioner.

Court Order / Findings

The Madras High Court held and directed as follows:

  1. The Court noted that the petitioner’s GST registration had been cancelled due to failure to file returns for six months.
  2. The Court considered the earlier decision in Tvl. Suguna Cutpiece vs Appellate Deputy Commissioner (ST) (GST) and Others.
  3. The Court observed that the directions in Suguna Cutpiece had consistently been followed in various subsequent decisions.
  4. The Court also recorded that the Revenue/Department had accepted the said view, as no appeal had been filed in the matters referred to before the Court.
  5. Accordingly, the Court held that the benefit extended in the earlier orders, particularly the Suguna Cutpiece case, should also be extended to the petitioner.
  6. The writ petition was ordered on the same terms as those contained in paragraph 229 of the Suguna Cutpiece judgment.
  7. No costs were awarded.
  8. The connected miscellaneous petition was also closed.
  1. The required exercise must be carried out by the respondents within thirty days from receipt of the order.

Important Clarification

The judgment does not grant an unconditional restoration of GST registration.

The relief is compliance-based and subject to strict fulfilment of the conditions laid down in the Suguna Cutpiece judgment. The petitioner is required to regularise past defaults, file pending returns, discharge applicable tax and related liabilities, and comply with restrictions concerning Input Tax Credit.

A particularly important clarification is that tax, interest, fine and fee relating to the defaulted period cannot be adjusted from unutilised or unclaimed Input Tax Credit. Further, Input Tax Credit cannot be utilised unless it is scrutinised and approved by the competent authority.

For the period subsequent to cancellation of registration, the petitioner must declare the correct value of supplies, file the required returns and pay GST in cash. Any Input Tax Credit earned can be utilised only after departmental scrutiny and approval.

The Court also permitted the Department to impose restrictions or limitations necessary to prevent undue passing of Input Tax Credit or misuse through bill trading.

The judgment is significant because the Court followed a consistent line of decisions granting an opportunity to defaulting taxpayers to regularise compliance and obtain revival of cancelled GST registration, rather than allowing cancellation to permanently prevent future compliance.

Sections / Legal Provisions Involved

Section 29(2)(c) of the CGST Act, 2017 / corresponding TNGST Act provision — Cancellation of registration where a registered person fails to furnish returns for the prescribed continuous period.

Section 30 of the CGST Act, 2017 / corresponding TNGST Act provision — Revocation of cancellation of registration.

Section 107 of the CGST Act, 2017 / corresponding TNGST Act provision — Statutory appeal against an adjudication order or decision, relevant to the petitioner’s inability to challenge the cancellation within the prescribed period.

Section 50 of the CGST Act, 2017 / corresponding TNGST Act provision — Interest on delayed payment of tax, relevant to belated discharge of tax liabilities.

Section 47 of the CGST Act, 2017 / corresponding TNGST Act provision — Levy of late fee for delayed furnishing of returns.

Section 16 of the CGST Act, 2017 / corresponding TNGST Act provision — Eligibility and conditions governing Input Tax Credit, relevant to scrutiny and permitted utilisation of ITC.

Article 226 of the Constitution of India — Constitutional jurisdiction invoked by the petitioner for issuance of a Writ of Certiorarified Mandamus.

Link to download the order -https://www.mytaxexpert.co.in/uploads/1783491688_1389compressed.pdf

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.