Facts of the Case

M/S Skylark Mansions Private Limited (GSTIN: 29AACCS6548LIZQ), Bengaluru, had its GST registration cancelled with effect from 20.05.2023 by order dated 07.05.2024, after it failed to respond to a show-cause notice dated 03.01.2024. The petitioner's case was that Corporate Insolvency Resolution Process (CIRP) had been initiated against it before the National Company Law Tribunal, during which its directors and employees could not take any action on the company's behalf, including filing GST returns or replying to the notice. The CIRP proceedings were disposed of on 22.10.2024, after which the petitioner sought restoration of registration and permission to file pending returns with due tax.

Issues Involved

  1. Whether cancellation of GST registration for non-compliance during the pendency of CIRP before the NCLT can be sustained once the CIRP concludes.
  2. Whether the petitioner is entitled to restoration of registration on undertaking to file pending returns and pay due tax.

Petitioner's Arguments

  • The inability to reply to the show-cause notice and file returns arose directly from the CIRP moratorium before the NCLT, during which the management could take no independent action.
  • With the CIRP proceedings having concluded on 22.10.2024, the petitioner was now free from the rigours of the Insolvency and Bankruptcy Code and in a position to upload all pending forms and documents.
  • On revival of registration, the petitioner undertook to pay all taxes due along with applicable interest.

Respondent's Arguments

  • No specific defence is recorded as having been pressed by the department; the matter proceeded on the undisputed fact of the CIRP having intervened during the notice period.

Court Order / Findings

  • The Court accepted that the petitioner had been genuinely prevented from uploading documents and replying to the notice on account of the CIRP process.
  • Holding that the CIRP resolution had enabled circumstances in the petitioner's favour, the Court granted the benefit of reviving the registration to allow the petitioner to resume its business activities in accordance with law.
  • A writ of certiorari was issued setting aside the cancellation order dated 07.05.2024, and the respondent was directed to restore the GST registration within four weeks, following which the petitioner would file pending returns along with due tax and interest within a further four weeks.
  • The petitioner was directed to pay Rs 10,000 to the Karnataka State Legal Services Authority.

Important Clarification

  • Where non-compliance leading to cancellation of GST registration is directly attributable to a moratorium under the Insolvency and Bankruptcy Code during CIRP, courts are inclined to treat it as a valid ground for restoration once the CIRP concludes.
  • Restoration is conditioned on the assessee filing all pending returns and clearing due tax and interest within a stipulated timeframe, ensuring revenue interests are protected.

Sections Involved

  • Section 29(2), CGST/KGST Act, 2017 – cancellation of registration for non-compliance.
  • Insolvency and Bankruptcy Code, 2016 – CIRP moratorium affecting corporate debtor's compliance capacity.

Decision – In Favour of

The decision is in favour of the assessee, Skylark Mansions Private Limited — cancellation was set aside and restoration of registration directed subject to compliance conditions.

Case Details

High Court of Karnataka at Bengaluru – WP No. 19408 of 2025 (T-RES) – Neutral Citation: 2025:KHC:26486 – Coram: Hon'ble Mr. Justice Suraj Govindaraj – Order dated 16.07.2025.

Link to Download the Order

Click here to view/download the full order

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.