Facts of the Case

The petitioner, Kali Shankar Enterprises, a partnership firm represented by its Managing Partner G. Ramakrishna Raju, challenged the cancellation of its GST registration (Reference No. ZA3220151360, dated 11.03.2022) ordered by the GST Officer, Steel Plant Circle, Visakhapatnam, and the subsequent appellate endorsement dated 06.11.2023 by the Additional Commissioner (ST), Appellate Authority, Vijayawada, rejecting admission of its appeal as filed beyond the condonable period of delay. The show cause notice dated 25.01.2022 cited, as the sole ground, "filing nil returns continuously for more than 6 months." It was admitted before the Court that the petitioner had not filed any reply to the show cause notice, yet the cancellation order itself, self-contradictorily, referred both to a reply dated 04.02.2022 and to the fact that no reply had been submitted. The Government Pleader later conceded this was a clerical mistake. The matter was heard by a Division Bench of the Andhra Pradesh High Court.

Issues Involved

  1. Whether "filing nil returns continuously for more than six months" is a valid statutory ground for cancellation of GST registration under Section 29 of the GST Act, 2017 read with Rule 22 of the CGST Rules, 2017.
  2. Whether the cancellation order suffered from non-application of mind due to its internally contradictory recitals about the petitioner's reply.
  3. Whether the appellate order dismissing the appeal as time-barred could survive once the primary cancellation order itself was found to be without jurisdiction.

Petitioner's Arguments

  • The cancellation order assigns no valid reason for cancellation and self-contradictorily records both that a reply was filed on 04.02.2022 and that no reply was submitted.
  • The ground stated in the show cause notice — continuous filing of nil returns for more than six months — is not covered under any clause of Section 29(2) of the GST Act nor under Rule 22 of the CGST Rules.
  • Even though the petitioner could not file a reply to the show cause notice, the order was still legally required to record a valid reason for cancellation, which it failed to do.

Respondent's Arguments

  • The appellate authority correctly dismissed the appeal since it was filed beyond the condonable period of delay, and such dismissal purely on limitation grounds cannot be faulted.
  • On instructions, it was conceded that the reference to a reply dated 04.02.2022 in the cancellation order was a clerical mistake, since no reply had in fact been filed by the petitioner.

Court Order/Findings

  • The Court found the cancellation order internally inconsistent and reflective of non-application of mind, since it both acknowledged and denied receipt of a reply.
  • On a plain reading of Section 29(2) of the GST Act and Rule 22 of the CGST Rules, continuous filing of nil returns for more than six months is not a ground recognised for cancellation of registration, and neither the show cause notice nor the impugned order alleged that the nil returns were incorrectly filed or in contravention of any provision.
  • Since the cancellation order was without jurisdiction and without any valid statutory ground, it could not be sustained; consequently, the appellate order dismissing the appeal on limitation grounds also could not survive.
  • The writ petition was allowed and both impugned orders were set aside, with liberty to the respondents to initiate fresh proceedings in accordance with law, if required. No costs were awarded.

Important Clarification

Filing continuous nil GST returns for over six months is not, by itself, a ground enumerated under Section 29(2) of the GST Act or Rule 22 of the CGST Rules for cancellation of registration. Before cancelling registration on that basis, the department must show that the nil returns were incorrect or filed in contravention of the Act or Rules; an order that fails to record any valid statutory ground is liable to be set aside as without jurisdiction.

Sections Involved

  • Section 29, GST Act, 2017 — cancellation or suspension of registration; sets out an exhaustive list of grounds on which registration may be cancelled.
  • Rule 22, CGST Rules, 2017 — procedure for cancellation of registration, including show cause notice in FORM GST REG-17 and reply in FORM GST REG-18.
  • Section 107, GST Act, 2017 — appeal to the Appellate Authority, including the condonable period of delay for filing an appeal.

Decision – In Favour of

The decision is clearly in favour of the Assessee. The High Court allowed the writ petition and set aside both the cancellation order and the appellate order dismissing the appeal, holding that the sole ground cited — continuous nil returns — is not a valid statutory basis for cancellation. The department was given liberty to initiate fresh proceedings if warranted, but the registration cancellation as it stood could not be sustained.

Related Case Laws

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

Case Details

  • Court: High Court of Andhra Pradesh at Amaravati
  • Case No.: WRIT PETITION NO: 31675 OF 2023
  • CNR: Not available
  • Coram: Justice Ravi Nath Tilhari and Justice A.V. Ravindra Babu
  • Decision Date: 18.12.2023
  • Disposal Nature: Allowed; orders set aside

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