Facts of the Case

ANDSRR Enterprises, a civil work contractor represented by its authorised signatory and based in Telangana, had its GST registration cancelled by an order-in-original dated 25.03.2023 on account of delay in filing returns. The petitioner filed an appeal seeking revocation of the cancellation, which was rejected by Order-in-Appeal No. HYD-GST-MD-APZ-071-2023-24 dated 08.08.2023 passed by the Additional Commissioner (Appeals-II). Aggrieved, the petitioner approached the High Court under Article 226, challenging the appellate rejection as arbitrary and violative of principles of natural justice. The petitioner also disclosed that there was admitted delay both at the stage of filing returns and at the stage of filing the appeal against the original cancellation order, so that the question before the Court was essentially whether these twin delays should permanently foreclose the possibility of restoration.

Issues Involved

  1. Whether the delay in filing GST returns and the consequent delay in filing the revocation appeal justified outright rejection of the appeal without restoring the registration.
  2. Whether cancellation of GST registration served any real purpose to the Revenue when the assessee remained willing to comply with statutory obligations, including payment of late fees.
  3. Whether the appellate authority ought to have adopted a more pragmatic, circumspection-based approach as laid down in precedent.

Petitioner's Arguments

  • The delay in filing returns arose from administrative difficulties, as the petitioner, a civil work contractor, received payments on an ad hoc, periodic basis, and the petitioner was willing to pay the applicable late fee.
  • Cancellation of registration would not benefit the Department, since without restoration the petitioner could not file returns or pay regular GST dues going forward.
  • Reliance was placed on the Delhi High Court's ruling in Kritika Agarwal vs. Union of India, holding that cancellation of GST registration 'must be exercised with circumspection and only in cases where it is necessary,' and on a Division Bench ruling of the same High Court remanding a similar matter for fresh consideration.

Respondent's Arguments

  • The Department contended that since there was an admitted delay both in filing returns and in filing the appeal, the impugned order could not be said to be contrary to law in any manner.

Court Order/Findings

  • Relying on the Kritika Agarwal principle that cancellation of GST registration is a measure to be exercised with circumspection and only where necessary, the Court set aside both the appellate order dated 08.08.2023 and the original cancellation order dated 25.03.2023.
  • The matter was remitted to the third respondent to consider the petitioner's request for restoration of registration, subject to payment of applicable late fees under the Rules and Circulars for the delayed return filings.
  • The Court clarified that since the matter was being remitted, the question of limitation would not stand in the way of the petitioner approaching the authority for restoration.
  • The Court expressly recorded that the petitioner's undertaking to pay the requisite late fee was central to the relief granted, signalling that restoration was not unconditional but tied to actual compliance with outstanding statutory obligations.

Important Clarification

Cancellation of GST registration is a drastic step that authorities must exercise with circumspection and only when genuinely necessary; where an assessee is willing to regularise delayed return filings by paying the prescribed late fee, courts may set aside both the cancellation and the rejection of the revocation appeal and remit the matter for fresh consideration on merits, without treating procedural delay as an automatic bar.

Sections Involved

  • Central Goods and Services Tax Act, 2017 — governs registration, cancellation, and revocation of GST registration.
  • Section 30, CGST Act, 2017 — provides the procedure for revocation of cancellation of registration.
  • Section 107, CGST Act, 2017 — governs appeals against orders including rejection of revocation applications.

Decision – In Favour of

The decision favours the Assessee: the writ petition was allowed without costs, both the cancellation order and the appellate rejection were set aside, and the matter was remitted for restoration of registration subject to payment of late fees.

Related Case Laws

No directly on-point case notes are currently published on this site.

Case Details

  • Court: High Court for the State of Telangana at Hyderabad
  • Case No.: Writ Petition No.25671 of 2023
  • CNR: Not available
  • Coram: Hon'ble Sri Justice P. Sam Koshy and Hon'ble Sri Justice Laxmi Narayana Alishetty
  • Decision Date: 03-10-2023
  • Disposal Nature: Allowed

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