Facts of the Case

CAR-MAA (JV), a joint venture engaged in construction and works-contract business and holding GST registration No.36AACAC8979RLZO, was alleged to have failed to file its GST returns continuously for more than six months. Pursuant to a show cause notice, to which the petitioner replied on 27.10.2021, the Superintendent of Central Tax, Nagole GST Division, cancelled its registration on 05.02.2019 under Section 29(2), Central Goods and Services Tax Act, 2017. The petitioner's appeal against this cancellation was rejected by the Joint Commissioner of Central Tax and GST (Appeals-I) on 16.11.2021 as barred by limitation under Section 107(1), Central Goods and Services Tax Act, 2017. The petitioner attributed the delay to disrupted business activities in Andhra Pradesh, an earlier order in W.P.No.29919 of 2018 restraining interference with execution of its contract works, and the COVID-19 lockdown, and also cited attachment of its bank account causing continuing hardship. The petitioner approached the Telangana High Court under Article 226 of the Constitution of India seeking restoration of its registration.

Issues Involved

  1. Whether cancellation of GST registration under Section 29(2) of the CGST Act, 2017 for non-filing of returns was sustainable on the facts.
  2. Whether the appellate authority was justified in rejecting the appeal solely on the ground of limitation under Section 107(1), without going into the merits.
  3. Whether continued attachment of the petitioner's bank account was warranted in these circumstances.

Petitioner's Arguments

  • The delay in filing the appeal arose from genuine business disruption in Andhra Pradesh and an interim order in W.P.No.29919 of 2018 restraining interference with the petitioner's contract works.
  • The COVID-19 pandemic and the resultant lockdown further contributed to the delay in approaching the appellate authority.
  • Attachment of the petitioner's bank account had caused undue hardship to the firm and its workmen and needed to be lifted.
  • As on date, no tax liability remained payable by the petitioner, as reflected even in the cancellation order itself.

Respondent's Arguments

  • Learned counsel for the respondents submitted that the bank could be directed to remit any outstanding tax dues of the petitioner directly to the tax authorities, following which the attachment on the bank account could be withdrawn.

Court Order / Findings

  • The Court confined its consideration to the cancellation of GST registration and the connected rejection of the appeal.
  • Having heard both sides, the Bench held that it would be in the interest of justice to restore the petitioner's GST registration.
  • The order dated 05.02.2019 cancelling registration, as affirmed by the appellate order dated 16.11.2021, was set aside.
  • Consequently, attachment of the petitioner's bank account was directed to be withdrawn.
  • Liberty was reserved to the respondents to issue appropriate notice in accordance with law if any dues are found payable by the petitioner.
  • The writ petition was disposed of with no order as to costs, and pending miscellaneous applications were closed.

Important Clarification

  • Cancellation of registration for non-filing of returns, coupled with a limitation-barred rejection of the consequent appeal, does not foreclose restoration where the interest of justice so warrants, particularly where the taxpayer shows bona fide inability to comply on account of external disruptions such as litigation-driven business interference or the pandemic.
  • Restoration of registration does not extinguish the department's right to recover any genuine outstanding dues; the department remains free to proceed by issuing fresh, lawful notice.

Sections Involved

  • Section 29(2), Central Goods and Services Tax Act, 2017 – empowers cancellation of GST registration, including for continuous non-filing of returns.
  • Section 107(1), Central Goods and Services Tax Act, 2017 – prescribes the limitation period for filing appeals against orders passed under the Act.
  • Article 226, Constitution of India, 1950 – writ jurisdiction invoked to challenge the cancellation order and the appellate rejection.

Decision – In Favour of

The decision is in favour of the Assessee/Petitioner. The Telangana High Court set aside both the cancellation of GST registration and the appellate rejection on the ground of limitation, restored the petitioner's GST registration, and directed withdrawal of the bank account attachment, while leaving the department free to raise any genuine demand through fresh, lawful notice.

Related Case Laws

No related case laws on this specific issue are available on this site at present.

Case Details

  • Court: High Court for the State of Telangana at Hyderabad
  • Case No.: Writ Petition No.33485 of 2021
  • Coram: Justice Ujjal Bhuyan and Justice Surepalli Nanda
  • Date of Order: 22.04.2022

Link to Download the Order

Download the full judgment (PDF)

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