Facts of the Case

The petitioner, M/S Adithya Developers, a partnership firm, filed a writ petition before the High Court of Karnataka at Bengaluru challenging an order dated 03.05.2023 passed in Form GST REG-19, cancelling its GST registration. The undisputed facts recorded by the Court were that the respondent had issued a show-cause notice on 21.02.2023 on the ground that the petitioner had not filed returns for a continuous period of six months, including the month of August 2022. After receiving the notice, the petitioner filed the return for August 2022 on 25.02.2023. Despite this, the respondent proceeded to cancel the petitioner's registration by the impugned order dated 03.05.2023, on the stated ground that there was no response to the show-cause notice. The petitioner thereafter approached the High Court under Articles 226 and 227 of the Constitution of India, seeking not merely quashing of the cancellation order but a further direction to the respondent to revoke the cancellation of GST registration altogether, given that the factual premise of continuous six-month default no longer held true once the returns had actually been filed, both for the disputed month and for several subsequent months along with applicable tax. The matter was heard on a day fixed for preliminary hearing, and since the counsel for the respondent Assistant Commissioner of Commercial Taxes did not dispute the sequence of dates and filings placed on record by the petitioner's counsel, the Bench proceeded to dispose of the petition at that very stage without requiring a detailed counter-affidavit or further hearing.

Issues Involved

  1. Whether the cancellation of GST registration for non-filing of returns for a continuous period of six months was sustainable once the petitioner had filed the August 2022 return before the cancellation order.
  2. Whether the petitioner's subsequent filing of returns for further months, along with tax and levy, before the cancellation order had a bearing on the validity of the cancellation.

Petitioner's Arguments

  • With the filing of the August 2022 return on 25.02.2023, the complaint of non-compliance as of the date of cancellation could, at most, relate to non-filing for a period of five months, not six.
  • Even before the impugned cancellation order, returns for a further five months had also been filed along with the necessary tax and levy, undermining the basis for cancellation.

Respondent's Arguments

  • The submissions made on behalf of the petitioner regarding the dates of filing of returns were not contested by the respondent.

Court Order/Findings

  • The Court accepted, as undisputed, that the petitioner had filed the August 2022 return on 25.02.2023 and further returns for five more months, with tax and levy, even before the cancellation order was passed.
  • Since the factual basis for cancellation — continuous non-filing for six months — no longer held good in light of the returns actually filed before the cancellation order, the Court allowed the petition and quashed the cancellation order.
  • The Court declared that there shall be revocation of the petitioner's cancellation of GST registration, granting the petitioner liberty to produce a certified copy of the order before the respondent for follow-up action on revocation.
  • The petition was disposed of in the petitioner's favour without any further remand or conditions attached to the revocation.

Important Clarification

Where a taxpayer files the pending GST returns for the period cited in a show-cause notice, even before the cancellation order is passed, the resultant cancellation for continuous six-month non-filing loses its factual foundation and is liable to be quashed, with revocation of registration following as a direct consequence.

Sections Involved

  • Central Goods and Services Tax Act, 2017 — provisions on cancellation of registration for continuous non-filing of returns (Form GST REG-19).

Decision – In Favour of

The decision is clearly in favour of the Assessee. The cancellation order was quashed outright and revocation of the GST registration was declared, without remand, since the undisputed facts showed the returns had in fact been filed before cancellation.

Related Case Laws

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

Case Details

  • Court: High Court of Karnataka at Bengaluru
  • Case No.: WP No. 23238 of 2023
  • CNR: 2023:KHC:40151
  • Coram: The Hon'ble Mr Justice B M Shyam Prasad
  • Decision Date: 09.11.2023
  • Disposal Nature: Writ allowed; GST registration cancellation quashed and revoked

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