Facts of the Case

The petitioner, M/s. Vemuri Kaveri Travels, a partnership firm engaged in transporting passengers by bus and registered under the CGST Act, 2017 and Telangana SGST Act (GSTIN: 36AAQFV3039C1Z3), had its GST registration cancelled by order dated 29.07.2020 of the Superintendent of Central Tax, Madapur-II Range, for non-filing of returns for a continuous period of six months under Section 29(2) of the CGST Act. The petitioner's reply to the preceding show-cause notice (dated 19.03.2020) was rejected. Its appeal against cancellation was also dismissed by Order-in-Appeal dated 26.08.2022, the appellate authority observing that despite continuing business and collecting taxes, the petitioner had not filed returns or discharged its tax liability, and finding the revocation request "not genuine."

Issues Involved

  1. Whether the appellate authority's rejection of the petitioner's request for revocation of registration cancellation, without effectively considering the petitioner's stated compliance efforts, was sustainable.
  2. Whether, in the absence of a functional GST Appellate Tribunal, the writ court should remand the cancellation issue for fresh consideration rather than relegate the petitioner to further appeal.

Petitioner's Arguments

  • The petitioner submitted that no GST Appellate Tribunal had been constituted under Section 112 of the CGST Act, so the question of filing a further appeal did not arise, leaving the writ petition as its only recourse.

Respondent's Arguments

  • The department's counsel supported the cancellation and appellate rejection, relying on the appellate authority's finding that the petitioner had continued business and collected taxes without filing returns, evidencing an intention to evade payment of taxes.

Court Order / Findings

  • The Court referred to its own earlier order in a similarly-placed case, M/s. Chenna Krishna Charvultr Karampudi v. Additional Commissioner (Appeals) (W.P.No.27071 of 2022), where a comparable cancellation was remanded for reconsideration.
  • The Court held that since cancellation of GST registration adversely impacts the assessee's ability to carry on business, it was in the interest of justice to remand the entire matter for fresh consideration rather than allow the cancellation to stand on the existing record.
  • Both the appellate order dated 26.08.2022 and the original cancellation order dated 29.07.2020 were set aside, with the matter remitted to the original authority to reconsider cancellation after affording the petitioner due opportunity of hearing, on condition that the petitioner file all pending returns as per the statute.

Important Clarification

  • Given the continuing non-constitution of the GST Appellate Tribunal under Section 112 of the CGST Act, High Courts have been willing to entertain writ petitions against appellate rejection of registration-cancellation matters, and to remand such matters for a fresh, reasoned decision rather than leave the assessee without any further statutory remedy.
  • A remand of this nature is typically conditioned on the assessee bringing its return-filing current, balancing the hardship of losing GST registration against the department's legitimate interest in compliance.

Sections Involved

  • Section 29(2) of the CGST Act, 2017 - empowers cancellation of registration for continuous non-filing of returns.
  • Section 112 of the CGST Act, 2017 - provides for appeal to the GST Appellate Tribunal, not yet constituted at the relevant time.

Decision – In Favour of

The writ petition was allowed in favour of the Assessee to the extent of remand: both the cancellation and appellate orders were set aside and the matter remitted for fresh consideration after hearing the petitioner, with no final ruling yet on whether the registration would ultimately be restored.

Case Details

High Court for the State of Telangana, Writ Petition No.35174 of 2022; Coram: Hon'ble The Chief Justice Ujjal Bhuyan and Hon'ble Sri Justice C.V. Bhaskar Reddy; decided on 20 September 2022.

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