Facts of the Case

The petitioner, Tvl.Ethiraj Catering Service, represented by its proprietor Radhakrishnan Ethiraj, is a caterer registered under the Central Goods and Services Tax Act, 2017 holding GSTIN 33AAJPE5607N2ZM, and has run the catering business for over four decades. Owing to illness, the petitioner, aged about 73 years, could not file the monthly return for the second half of 2022. The second respondent, the Assistant Commissioner (State Tax), Dindigul (Fort) Circle, cancelled the registration by order dated 01.03.2023 in Reference No.ZA3303230027343, with effect from 28.02.2023. The petitioner learnt of the cancellation only when a subsequent return was rejected. An appeal filed before the Deputy Commissioner under Section 108 of the Act was rejected for want of a hard copy of the impugned order, leaving the petitioner to approach the Madurai Bench of the Madras High Court by way of WP(MD)No.30721 of 2023 under Article 226 of the Constitution.

Issues Involved

  1. Whether cancellation of GST registration for non-filing of returns is sustainable where the default arose from illness and unfamiliarity with the online process.
  2. Whether the writ court can grant relief despite the statutory appeal having failed on a technical/procedural ground.
  3. Whether portal-only, English-only communication of notices is adequate for less literate small traders.
  4. What conditions ought to attach to restoration of a cancelled registration.

Petitioner's Arguments

  • The petitioner, educated only up to Standard 4 and unfamiliar with the GST portal, relies entirely on a private accountant to file returns.
  • Illness in 2023 left him unable to contact his accountant, and he was unaware of the consequences of non-filing.
  • Cancellation brought a catering business built over 40 years to a standstill, leaving him unable to pay staff or operate his bank account.
  • The statutory appeal was rejected only because the accountant failed to file a hard copy of the order as required, leaving no effective alternate remedy.
  • Relied on the Bombay High Court's ruling in W.P.No.11833 of 2022, the Uttarakhand High Court's Special Appeal No.123 of 2022, and this Court's own Suguna Cutpiece line of decisions, holding that cancellation of registration cannot be used to defeat the constitutional right to trade and livelihood under Articles 19(1)(g) and 21.

Respondent's Arguments

  • Notice was issued strictly in accordance with Section 169 of the Act through the common portal.
  • The petitioner himself filed his monthly returns through the same portal and cannot claim he did not receive the show cause notice sent the same way.
  • The impugned order was passed only after due show cause notice, and there is no error in the second respondent's action.

Court Order/Findings

  • The Court observed that the petitioner, aged 73 and educated only to Standard 4, depended on an accountant unfamiliar with GST law, while all communications from the department were issued only in English and only through the portal.
  • Cancellation of GST registration amounts, in practical terms, to a “capital punishment” for a trader, and sufficient opportunity must precede such action, particularly for uneducated small entrepreneurs.
  • Following its own earlier decision in W.P(MD).No.8086 of 2023 and the reasoning of the Bombay and Uttarakhand High Courts, the Court set aside the cancellation order dated 01.03.2023.
  • The respondents were directed to give the petitioner an opportunity to restore the registration within six weeks of receipt of the order, with no order as to costs.
  • The Court urged the GST department to consider issuing notices in regional languages and through SMS/post, not the portal alone, to reach less literate taxpayers.

Important Clarification

  • Registration cancellation for return-default should account for genuine incapacity such as illness or illiteracy and cannot be treated as an automatic, final consequence.
  • Article 226 relief remains available to restore registration even where a statutory appeal has failed on a technical ground, since the right to trade and livelihood under Articles 19(1)(g) and 21 cannot be defeated by procedural rigidity.
  • Restoration is conditional on filing pending returns and clearing tax, interest, late fee and penalty dues; such dues cannot be adjusted against unscrutinised Input Tax Credit.
  • Courts have flagged portal-only, English-only communication as inadequate for small, less literate taxpayers and have called for regional-language and SMS/postal notice.

Sections Involved

  • Section 29, CGST Act, 2017 — power to cancel GST registration, including for non-filing of returns.
  • Section 30, CGST Act, 2017 (with Rule 23) — revocation of cancellation of registration.
  • Section 108, CGST Act, 2017 — the appeal/revision procedure the petitioner invoked before the Deputy Commissioner, as recorded in the order.
  • Section 169, CGST Act, 2017 — modes of service of notices and orders, including through the common portal.
  • Article 226, Constitution of India — writ jurisdiction of the High Court.
  • Articles 19(1)(g) and 21, Constitution of India — the right to carry on trade or business and the right to livelihood.

Decision – In Favour of

The decision is in favour of the Assessee. The Madurai Bench of the Madras High Court set aside the cancellation of the petitioner's GST registration and directed the department to give him an opportunity to restore it within six weeks, subject to filing pending returns and clearing outstanding dues.

Related Case Laws

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

Case Details

  • Court: Madras High Court (Madurai Bench)
  • Case No.: WP(MD)No.30721 of 2023
  • CNR: Not available on record
  • Coram: Justice B. Pugalendhi
  • Decision Date: 21.12.2023
  • Disposal Nature: Allowed

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