Facts of the Case

Petitioner no.1, M/s Ennkay Timbers, a timber trading firm, is run by its sole proprietor, petitioner no.2, holding GSTIN 09BZAPK7818J1Z0. Petitioner no.2 could not file GST returns for six consecutive months following the deaths of his mother and sister, which left him financially and mentally exhausted. A show cause notice dated 4.9.2021 proposed cancellation under Section 29(2)(c) of the GST Act; the petitioner could not reply within the stipulated time, and the registration was cancelled on 18.9.2021. An earlier writ petition (Writ Tax No.757 of 2022) challenging the cancellation was dismissed on 27.5.2023 on the ground of alternate appellate remedy. The subsequent appeal was also rejected by order dated 4.8.2022, leading to the present petition.

Issues Involved

  1. Whether cancellation of GST registration under Section 29(2)(c) for failure to file returns for six consecutive months, in circumstances of genuine hardship, warrants restoration.
  2. Whether the registration can be restored subject to payment of outstanding dues in instalments, given that dues cannot be deposited online while registration remains cancelled.

Petitioner's Arguments

  • Non-filing of returns for six months was caused by the deaths of the proprietor's mother and sister, leaving him financially and mentally exhausted, not by any intent to evade tax.
  • GSTR-1 returns had in fact been filed from March to June 2021, and only the subsequent months lapsed; the tax liability itself was not disputed.
  • Was ready and willing to clear all dues with interest, but only in instalments as directed by the Court, since deposit could not be made online until the registration was restored.
  • Relied on the Kerala High Court's ruling in Pazhayidom Food Ventures (P) Ltd. and the Guwahati High Court's ruling in M/s Veteran Facility Management Services Pvt. Ltd., both permitting instalment payment and restoration of registration in comparable hardship situations.

Respondent's Arguments

  • The petitioner had admitted non-filing of GSTR-1 and GSTR-3B returns for more than six consecutive months, justifying the cancellation.
  • The petitioner continued its business activities and collected GST from customers during the default period but did not deposit the tax, which justified cancellation rather than leniency.
  • Sought dismissal of the writ petition.

Court Order/Findings

  • Accepted that the non-filing arose from genuine family bereavement causing financial and mental distress, and noted the petitioner's stated willingness to clear all dues with interest.
  • Following the Kerala and Guwahati High Court precedents, directed restoration of the GST registration within one week of production of a certified copy of the order, conditional on the petitioner depositing Rs. 6,00,000 within a week of restoration, with the balance outstanding tax and interest payable in six equal monthly instalments.
  • Allowed the writ petition with no order as to costs.

Important Clarification

  • Genuine personal hardship — such as bereavement — can justify restoration of a GST registration cancelled under Section 29(2)(c), even where non-filing for six consecutive months is admitted.
  • Courts are willing to phase payment of admitted GST dues into instalments where the assessee does not dispute liability but cites a bona fide inability to pay in one tranche, drawing on the Kerala and Guwahati High Court lines of authority.
  • The practical catch-22 — that dues cannot be deposited online once registration is cancelled — is itself treated as a ground to first restore access to the portal before enforcing payment.

Sections Involved

  • Section 29(2)(c) of the Central Goods and Services Tax Act, 2017 – empowers cancellation of registration where a registered person fails to furnish returns for a continuous period as prescribed.

Decision – In Favour of

The order is in favour of the Assessee. The writ petition was allowed and the registration ordered restored, subject to deposit of dues in instalments.

Related Case Laws

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

Case Details

  • Court: High Court of Judicature at Allahabad
  • Case No.: Writ Tax No. 1208 of 2022
  • CNR: Not available on record
  • Coram: Hon'ble Piyush Agrawal, J.
  • Decision Date: 11.10.2023
  • Disposal Nature: Allowed (GST registration ordered to be restored subject to deposit of dues in instalments)

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