W.P.(MD).No.22967 of 2023

Facts of the Case

The petitioner, proprietor of M/s. Atheefa Mathiyastha Kadai Jewellery, was voluntarily registered under GST bearing GSTIN 33BHXPM6489C1ZR. Returns were to be filed by an appointed accountant, but NIL returns went unfiled for six months due to the accountant's default and the petitioner's own ill health and financial loss. The respondent issued a show cause notice dated 08.08.2022 on the web portal and cancelled the registration by order dated 25.08.2022 (Reference No. ZA330822089689V) for non-filing of returns. The petitioner later filed returns up to January 2023 with late fee, but could not upload subsequent returns since the registration remained cancelled, and sought restoration by writ before the Madurai Bench of the Madras High Court.

Issues Involved

  1. Whether the cancellation order dated 25.08.2022 was sustainable where it recorded only that the petitioner failed to respond to the show cause notice.
  2. Whether the petitioner was entitled to the benefit of amnesty Notification No.03/2023-Central Tax dated 31.03.2023, despite the cancellation predating the notification's stated cut-off.
  3. Whether the ratio of Tvl. Suguna Cut Piece v. Appellate Deputy Commissioner (ST) applied to condone the delay in seeking revocation.

Petitioner's Arguments

  • Counsel submitted that the impugned order was bereft of reasons and merely recorded non-response to the notice without addressing the petitioner's bona fide explanation.
  • It was argued that the COVID-period limitation exclusion recognised in Suguna Cut Piece should extend to the petitioner's case for condoning delay in revocation.
  • The petitioner contended that unawareness of Notification No.03/2023-Central Tax should not disentitle relief, and expressed willingness to pay GST dues and late fee if the registration were restored.

Respondent's Arguments

  • The respondent's cancellation order recorded that the petitioner had not responded to the show cause notice nor appeared for personal hearing.
  • No specific counter was pressed beyond defending the cancellation as procedurally issued on the ground of continued non-filing of returns for six months.

Court Order / Findings

  • The Court found that the government's Notification No.03/2023-Central Tax dated 31.03.2023 extended time up to 30.06.2023 for taxpayers whose cancellation fell before 31.12.2022, a benefit the petitioner could not avail as he was unaware of it.
  • The Court held the petitioner entitled to the benefit of the notification and to the ratio of the Suguna Cut Piece judgment, and found the impugned order deficient for lack of reasoning.
  • The cancellation order was quashed, and the respondent was directed to restore the petitioner's GST registration, with the petitioner thereafter required to file returns and pay tax and penalty as per law. The writ petition was allowed without costs.

Important Clarification

  • A taxpayer's lack of awareness of a beneficial amnesty notification is a factor courts will weigh in favour of restoration, rather than treating cancellation as final merely for missing the notification's own window.
  • Registration cancelled for return-filing defaults attributable to illness or an intermediary's lapse can be restored on terms requiring the assessee to regularise compliance going forward.

Sections Involved

  • Section 29, CGST Act, 2017 — governs cancellation of GST registration, including for continuous default in filing returns.
  • Notification No.03/2023-Central Tax dated 31.03.2023 — amnesty notification extending the window for revocation applications for cancellations up to 31.12.2022.

Decision – In Favour of

The decision is in favour of the assessee, with the cancellation order quashed and restoration of the GST registration directed, subject to the petitioner filing pending returns and clearing tax and penalty dues.

Case Details

Court: Madurai Bench of the Madras High Court
Case Number: W.P.(MD).No.22967 of 2023
Coram: Hon'ble Mrs. Justice S. Srimathy
Date of Order: 21.09.2023

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