Facts of the Case

The petitioner, Abdul Samad Mohamed Inayathullah, proprietor of M/s. AI Kareem Exports, a vegetable exporter registered under the Central Goods and Services Tax Act, 2017 holding GSTIN 33ANLPM1250C1Z1, challenged the cancellation of his registration by the Superintendent of CGST and Central Excise, Tiruchirappalli, vide order dated 25.06.2020 in Reference No.ZA3306200650251. A show cause notice dated 09.01.2020 had been issued, but without a specific date fixed for personal appearance. The registration was cancelled for non-filing of returns for a continuous period of six months. The petitioner's application for revocation of cancellation was also rejected by order dated 20.11.2020. He explained that his part-time accountant contracted Covid-19 and could not file returns in time, and by the time he sought to file a statutory appeal under Section 107, the limitation period had lapsed and the GST portal would not accept it.

Issues Involved

  1. Whether cancellation of GST registration for non-filing of returns, following a show cause notice that did not fix a specific hearing date, was sustainable.
  2. Whether a writ court can grant relief under Article 226 once the statutory appeal remedy under Section 107(4) is time-barred.
  3. Whether denial of GST registration on technical grounds violates the petitioner's right to livelihood under Article 21.

Petitioner's Arguments

  • The show cause notice dated 09.01.2020 did not specify a date for personal appearance, and the cancellation order was passed without a hearing.
  • Returns could not be filed on time because the petitioner's accountant was infected with Covid-19 during the relevant period.
  • Although an appeal remedy exists under Section 107, the statutory limitation had expired and the GST portal does not permit filing of a time-barred appeal.
  • Since GSTIN is mandatory to run his export business, cancellation directly threatens his livelihood.

Respondent's Arguments

  • The petitioner was given sufficient opportunity, including seven days to respond to the show cause notice dated 09.01.2020.
  • Having failed to respond to the notice, the cancellation order was validly passed under the GST Act.
  • The petitioner failed to file the statutory appeal within the limitation prescribed under Section 107(4), and there was no reason to interfere with the impugned order.

Court Order/Findings

  • The Court relied extensively on its own earlier ruling in Suguna Cutpiece Vs Appellate Deputy Commissioner (ST), holding that no purpose is served by keeping a willing assessee outside the GST regime merely because of a procedural default, since this ultimately causes revenue loss to the State as well.
  • The constitutional guarantee to carry on trade and commerce under Article 19(1)(g), and the right to livelihood under Article 21, cannot be curtailed by rigid application of limitation provisions in the GST enactments.
  • The writ petition was disposed of in terms of the Suguna Cutpiece guidelines: the petitioner must file all pending returns and pay tax, interest, fine and late fee within 45 days (not adjustable from unutilised Input Tax Credit), any Input Tax Credit shall be usable only after departmental scrutiny, and on compliance the registration shall stand revived.
  • The Court additionally urged the GST Department to consider issuing cancellation notices in regional languages and by SMS, given that many small traders are unfamiliar with English-language emails.

Important Clarification

Even where the statutory appeal against a GST registration cancellation order has become time-barred and the portal will not accept it, the High Court can still restore registration under Article 226 by applying the safeguarded framework laid down in Suguna Cutpiece — filing of overdue returns, payment of tax, interest and fees, and scrutiny of any Input Tax Credit before restoration — instead of permanently shutting the assessee out of the GST regime.

Sections Involved

  • Section 29(2), CGST Act, 2017 — empowers cancellation of registration for continuous non-filing of returns.
  • Section 107, CGST Act, 2017 — provides the appeal remedy and limitation period against orders such as cancellation.
  • Article 19(1)(g) and Article 21, Constitution of India — protect the right to carry on trade and the right to livelihood, invoked to justify writ relief.

Decision – In Favour of

The decision favours the Assessee. The Madurai Bench quashed the effect of the cancellation and directed revival of the GST registration subject to compliance with the Suguna Cutpiece safeguards, rather than leaving the petitioner permanently outside the GST regime on account of a lapsed appeal.

Related Case Laws

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

Case Details

  • Court: Madurai Bench of Madras High Court
  • Case No.: WP(MD) No.8016 of 2023
  • CNR: Not available
  • Coram: Justice B. Pugalendhi
  • Decision Date: 29 September 2023
  • Disposal Nature: Disposed of in terms of Suguna Cutpiece guidelines

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