Facts of the Case

The petitioner, Michael Rajkumar, Proprietor of M/s M.R. Traders, challenged the cancellation of his GST registration before the Madurai Bench of the Madras High Court. The GST registration had been cancelled under Section 29 of the Central Goods and Services Tax Act, 2017, on the ground that the petitioner had failed to file GST monthly returns for a continuous period of six months.

The petitioner contended that he was suffering from serious kidney-related medical ailments, underwent treatment, and remained on prolonged bed rest. During this period, the business operations were handled by employees while statutory compliances were entrusted to a part-time accountant. The petitioner became aware of the cancellation only after being informed by other taxpayers. Although an appeal was subsequently filed, the appellate authority dismissed it solely on the ground that it was filed beyond the prescribed limitation period.

Issues Involved

  1. Whether the cancellation of GST registration should continue despite the taxpayer's genuine medical circumstances.
  2. Whether the High Court can exercise its writ jurisdiction to grant relief even when the statutory appeal is barred by limitation.
  3. Whether the principles laid down in Tvl. Suguna Cutpiece vs Appellate Deputy Commissioner (ST) (GST) should be extended to the present case for restoration of GST registration.

Petitioner’s Arguments

  • The petitioner submitted that he could not comply with GST return filing requirements because of serious medical issues requiring treatment and bed rest.
  • He argued that the cancellation came to his knowledge only later, after information was received from business counterparts.
  • Although the statutory appeal was rejected as time-barred, the petitioner relied upon the landmark decision in Tvl. Suguna Cutpiece, wherein the Madras High Court had granted restoration of cancelled GST registrations subject to specified conditions.
  • It was argued that similar equitable relief should be extended in the present matter considering the bona fide reasons for non-compliance.

Respondent’s Arguments

  • The Revenue submitted that the appellate authority had correctly rejected the appeal since it was filed beyond the statutory limitation period.
  • It was contended that the appellate authority had no power to condone delay beyond the period permitted under the GST law.
  • Therefore, the appellate order could not be faulted merely because the petitioner sought equitable relief.

Court Order / Findings

The Madras High Court observed that the appellate authority was legally justified in rejecting the appeal on the ground of limitation.

However, the Court noted that in several earlier judgments, particularly the landmark decision in Tvl. Suguna Cutpiece vs Appellate Deputy Commissioner (ST) (GST), identical relief had consistently been granted to taxpayers whose registrations had been cancelled for non-filing of returns.

The Court further observed that:

  • The Department had consistently accepted the principles laid down in Suguna Cutpiece, as no appeal had been preferred against those judgments.
  • Judicial consistency required similar treatment in identical circumstances.
  • Therefore, the petitioner was held entitled to the same benefit granted in Suguna Cutpiece.

Accordingly, the High Court allowed the writ petition and directed that the petitioner would receive all the reliefs and conditions contained in paragraph 229 of the Suguna Cutpiece judgment, including restoration of GST registration subject to compliance with statutory requirements such as filing pending returns, payment of tax, interest, penalty, late fee, and fulfilment of other prescribed conditions.

Important Clarification

  • Delay in filing a statutory appeal does not automatically prevent the High Court from exercising its extraordinary writ jurisdiction in deserving cases.
  • Cancellation of GST registration due to non-filing of returns may be reconsidered where sufficient and genuine reasons are established.
  • Courts may extend equitable relief by applying the principles laid down in Tvl. Suguna Cutpiece.
  • Restoration of GST registration remains conditional upon filing pending returns and payment of applicable tax, interest, penalty and late fees.
  • The decision reinforces judicial consistency in GST registration restoration matters involving bona fide taxpayers.

Sections Involved

  • Section 29 – Cancellation of Registration – Central Goods and Services Tax Act, 2017
  • Article 226 – Constitution of India (Writ Jurisdiction)
  • Relevant provisions relating to filing of GST returns under the CGST Act, 2017.

Link to Download the Order

https://www.mytaxexpert.co.in/uploads/1785388843_2273compressed.pdf

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