Facts of the Case

The petitioner filed a writ petition under Article 226 of the Constitution of India seeking a direction to Respondent Nos. 2 to 5 to cancel the GST registration of Respondent No. 6, Navarang Stores, represented by Respondent No. 7.

The dispute concerned GSTIN 36AGOPA7937J1ZZ, registered in the name of Respondent No. 6 at premises situated at H. No. 6-3-61, Kothagudem Town and Mandal, Bhadradri Kothagudem District.

The petitioner’s case was founded on subsequent property transactions. According to the writ petition, Respondent No. 7 had sold the property in favour of Respondent Nos. 8 and 9 through a registered sale deed dated 23 January 2013, and Respondent Nos. 8 and 9 thereafter sold the property to the petitioner through a registered sale deed dated 5 May 2021, when possession was also stated to have been delivered.

The petitioner had submitted representations before the authorities seeking cancellation of the GST registration. The judgment specifically records representations dated 21 March 2022, 2 May 2022 and 25 May 2022.

On the basis of those representations, Respondent No. 4 directed Respondent No. 5, being the “proper officer” within the meaning of Section 2(91) of the Telangana Goods and Services Tax Act, 2017, to conduct an enquiry and take appropriate steps under the Act.

The proper officer thereafter submitted a report dated 1 July 2022. The report stated that Respondent No. 6 had filed a receipt as evidence of possession of the premises in its name; that the GST registration in question had been migrated from the APGST/VAT regime; and that the initial registration application had been filed under the erstwhile tax regime.

The report further noted the existence of O.S. No. 199 of 2021, described as a civil suit concerning a money transaction between Abdul Sattar and Gopal Reddy. The proper officer concluded that such civil proceedings could not constitute a valid ground for cancellation of GST registration. It was also recorded that Respondent No. 6 had been filing the required returns under the TGST Act, 2017 and, therefore, no action was called for.

Issues Involved

The principal issues before the High Court were:

  1. Whether the GST authorities could be directed under Article 226 of the Constitution of India to cancel the GST registration of Respondent No. 6 on the basis of the petitioner’s claim arising from subsequent ownership and possession of the premises.
  2. Whether the existence of a civil dispute or civil suit concerning transactions between private parties could constitute a valid ground for cancellation of GST registration.
  3. Whether the migrated GST registration could be treated as having been obtained on the basis of incorrect documents when the initial registration had originated under the erstwhile APGST/VAT regime.
  4. What was the legal significance of the enquiry and report submitted by the proper officer acting in terms of Section 2(91) of the TGST Act, 2017.
  5. Whether writ relief could be granted when the proper officer’s report dated 1 July 2022 had not itself been challenged in the writ proceedings.

Petitioner’s Arguments

The petitioner sought cancellation of the GST registration standing in the name of Respondent No. 6 and represented by Respondent No. 7.

The petitioner’s case, as reflected in the writ pleadings, was that the property connected with the registered business premises had already been sold by Respondent No. 7 to Respondent Nos. 8 and 9 through a registered sale deed dated 23 January 2013. Thereafter, Respondent Nos. 8 and 9 sold the property to the petitioner through a registered sale deed dated 5 May 2021, and possession was stated to have been delivered on the same day.

Accordingly, the petitioner contended that the authorities ought to act upon his representations and take steps for cancellation of the GST registration continuing in the name of Respondent No. 6 at the said premises.

The petitioner alleged that the failure of the authorities to act upon his representations was illegal and arbitrary and invoked Articles 21 and 300A of the Constitution of India.

Respondents’ Arguments / Stand of the Tax Authorities

The respondents relied upon the enquiry undertaken by the proper officer and the report dated 1 July 2022.

The proper officer’s findings were that:

  • Respondent No. 6 had filed a receipt as evidence of possession of the premises in its name.
  • The GST registration was not a fresh registration originating solely under the GST regime but had been migrated from APGST/VAT.
  • The initial application for registration had been filed under the erstwhile tax regime.
  • In those circumstances, it was not possible to attribute to Respondent No. 6 that the tax registration had been obtained on the basis of incorrect documents.
  • The civil suit, O.S. No. 199 of 2021, concerning a money transaction between Abdul Sattar and Gopal Reddy could not constitute a valid ground for cancellation of GST registration.
  • Respondent No. 6 had been filing the required returns under the provisions of the TGST Act, 2017.
  • Therefore, no action for cancellation was called for.

Court Order / Findings

The Telangana High Court noted that the petitioner had submitted representations and that the competent authorities had acted upon them by directing the proper officer to conduct an enquiry.

The Court took note of the proper officer’s report dated 1 July 2022, including the findings that the GST registration had been migrated from the APGST/VAT regime, the initial application had been made under the erstwhile regime, and it could not be attributed that Respondent No. 6 had obtained tax registration on the basis of incorrect documents.

The Court further noticed the finding that the civil suit concerning the money transaction between Abdul Sattar and Gopal Reddy could not be a valid ground for cancellation of GST registration.

Significantly, the High Court expressly observed that the proper officer’s report had not been assailed in the writ proceedings.

Upon thorough consideration of all aspects of the matter, the Court held that the filing of the writ petition was “wholly misconceived.”

Accordingly:

  • The writ petition was dismissed.
  • Pending miscellaneous applications, if any, were closed.
  • There was no order as to costs.

Important Clarification

The judgment is significant because it distinguishes a private civil or property-related dispute from the statutory basis required for cancellation of GST registration.

The order indicates that a subsequent claim of ownership or possession over business premises does not, by itself, automatically establish that an existing GST registration must be cancelled. This is particularly relevant where:

  • the GST registration was migrated from an earlier APGST/VAT registration;
  • the original registration application arose under the erstwhile tax regime;
  • the proper officer found material relating to possession of the premises;
  • the registered person continued filing statutory returns; and
  • the civil dispute relied upon did not itself establish a valid basis for cancellation of GST registration.

Another important procedural aspect is that where the proper officer has already conducted an enquiry and submitted an adverse report, failure to specifically challenge that report may materially affect the maintainability and success of writ proceedings seeking consequential cancellation action.

Important legal distinction: The Court did not lay down an absolute proposition that ownership or possession disputes can never have any relevance to GST registration. The decision turned on the specific facts before the Court, including the migrated nature of the registration, the proper officer’s enquiry report, the continuing filing of returns, the nature of the civil dispute, and the fact that the report itself had not been challenged.

Sections Involved

  • Section 2(91) of the Telangana Goods and Services Tax Act, 2017 – Definition of “proper officer”.
  • Article 226 of the Constitution of India – High Court’s writ jurisdiction.
  • Article 21 of the Constitution of India – Invoked in the writ pleadings.
  • Article 300A of the Constitution of India – Right not to be deprived of property save by authority of law; invoked by the petitioner.
  • Section 151 of the Code of Civil Procedure, 1908 – Invoked in I.A. No. 1 of 2022 for interim relief.

Link to download the order - https://www.mytaxexpert.co.in/uploads/1783505285_2104compressed.pdf

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