Facts of the Case

The petitioner, Ayyanathan Gnanasekaran, Proprietor of M/s Chennai SAFIRE PRINTERS, was registered under the Goods and Services Tax law. The petitioner’s GST registration was cancelled on the ground that monthly GST returns had not been filed for a continuous period of six months.

The Registration Certificate was consequently cancelled with effect from 23.11.2021 in view of Section 29 of the Central Goods and Services Tax Act, 2017.

Aggrieved by the cancellation, the petitioner approached the Madurai Bench of the Madras High Court under Article 226 of the Constitution of India, seeking quashing of the cancellation order and a direction to revoke the cancellation of the GST registration.

The petitioner explained that during the COVID-19 pandemic outbreak, the volume of business transactions had drastically declined and office staff availability was restricted. It was further submitted that the proprietor had been severely affected by viral fever. Due to these circumstances, the petitioner could not file an appeal against cancellation within the time stipulated under the GST law.

Issues Involved

  1. Whether the petitioner could be granted relief against cancellation of GST registration effected under Section 29 of the CGST Act, 2017 for failure to file monthly returns continuously for six months.
  2. Whether the benefit of the directions issued in Tvl. Suguna Cutpiece vs The Appellate Deputy Commissioner (ST) (GST) and Others could be extended to the petitioner.
  3. Whether revival of GST registration could be permitted subject to filing pending returns and payment of tax, interest, fine, fee and other applicable amounts.
  4. Whether the petitioner could receive similar relief when the Madras High Court had consistently followed the principles and directions laid down in the Suguna Cutpiece case in comparable matters.

Petitioner’s Arguments

The petitioner submitted that the default in filing GST returns and the inability to challenge the cancellation within the prescribed period occurred due to exceptional circumstances arising during the COVID-19 pandemic.

The principal submissions were:

  • The volume of business transactions had drastically declined during the COVID-19 pandemic.
  • Availability of office staff was restricted.
  • The proprietor was severely affected by viral fever.
  • Due to these circumstances, the petitioner was unable to file an appeal within the time stipulated under the Act against cancellation of registration.
  • In identical circumstances, the Madras High Court had already granted relief in Tvl. Suguna Cutpiece vs The Appellate Deputy Commissioner (ST) (GST) and Others, W.P. Nos. 25048, 25877, 12738 of 2021 etc., batch, decided on 31.01.2022.
  • The principles laid down in the Suguna Cutpiece case had subsequently been followed consistently in several other decisions.

Accordingly, the petitioner sought extension of the same benefit and revival of the cancelled GST registration subject to compliance with the conditions prescribed by the Court.

Respondent’s Arguments

The judgment records the appearance of the Standing Panel Counsel, assisted by the Junior Standing Counsel, for the respondent.

The Court’s order does not set out any detailed independent counter-arguments or separate substantive objections advanced by the respondent against extension of the benefit granted in the earlier line of decisions.

Significantly, the Court observed that the Revenue/Department had accepted the view adopted in the earlier cases, as evident from the fact that no appeal had been filed in any of those matters.

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 recorded an important circumstance: the Revenue/Department had accepted the said view, as evident from the fact that no appeal had been filed in any of those matters.

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 present petitioner.

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

The Court imposed no costs and closed the connected miscellaneous petitions.

Important Clarification

The judgment does not grant an unconditional restoration of GST registration merely because the taxpayer approached the High Court.

The relief was extended on the same terms as paragraph 229 of the Suguna Cutpiece decision. Therefore, revival remained connected with compliance requirements including filing of pending returns, payment of tax and other applicable amounts, restrictions concerning Input Tax Credit and scrutiny by the competent tax authorities.

A particularly important aspect is that the earlier directions did not permit payment of tax, interest, fine or fee by adjustment against unutilised or unclaimed Input Tax Credit. Further, Input Tax Credit was subject to scrutiny and approval before utilisation.

The Court also recognised the Department’s authority to impose appropriate restrictions or limitations to prevent undue passing of Input Tax Credit and attempts at bill trading.

Section Involved

Section 29 of the Central Goods and Services Tax Act, 2017

The petitioner’s GST registration was cancelled in view of Section 29 of the CGST Act, 2017 on the premise that monthly GST returns had not been filed for a continuous period of six months.

The case concerns judicial relief against such cancellation and the possibility of revival of registration subject to compliance with conditions laid down in the earlier binding line of decisions followed by the Madras High Court.

Article 226 of the Constitution of India

The petitioner invoked the writ jurisdiction of the High Court seeking a Writ of Certiorarified Mandamus for quashing the cancellation order and directing revival of the GST registration.

Link to download the order - https://mytaxexpert.co.in/uploads/1783334076_1136compressed.pdf

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