Facts of the Case

Tvl.BY4PETS had its GST registration (GSTIN 33AAXFB1407B1ZW) cancelled by the Superintendent, Madurai Rural (South), vide order dated 24.04.2024, for failure to file GST returns for a continuous period of six months. The petitioner explained that, due to financial constraints, it had been unable to file returns for that period, but was now willing to file all pending returns and pay the entire tax liability along with applicable interest and penalty, and accordingly sought revocation of the cancellation order.

Issues Involved

  1. Whether the GST registration cancellation, arising from non-filing of returns due to genuine financial hardship, ought to be revoked on the petitioner's undertaking to comply with pending filings and dues.
  2. On what conditions such revocation ought to be granted, and how any accumulated but unscrutinised ITC should be treated.

Petitioner's Arguments

  • Due to financial constraints, the petitioner had not filed GST returns for six months, resulting in cancellation of registration; the petitioner was now willing to file all pending returns and pay the entire tax liability, interest and penalty, and sought revocation.

Respondent's Arguments

  • The respondent confirmed the fact of cancellation and left it to the Court to pass an appropriate order.

Court Order / Findings

  • The Court found the reason given by the petitioner for non-compliance — financial constraints — to be genuine, and was inclined to revoke the cancellation, subject to a set of conditions.
  • The conditions included: payment of Rs.1,000/- to a specified charitable account; the Department instructing GSTN to enable the petitioner to file returns and pay tax/penalty/fine within four weeks; filing of all pending returns with tax dues, interest and the belated-filing fee within four weeks of restoration; and a clear direction that such payment shall not be made or adjusted from any Input Tax Credit lying unutilised with the petitioner.
  • Any unutilised ITC was directed not to be used until scrutinised and approved by the competent officer, and only such approved ITC could thereafter be utilised for discharging future tax liability.
  • Non-compliance with any condition would result in automatic cessation of the benefit granted.

Important Clarification

  • Where cancellation of GST registration is on account of non-filing of returns attributable to genuine financial hardship rather than fraudulent conduct, courts may revoke the cancellation on terms — but they will typically ring-fence any accumulated, unscrutinised ITC from being used to discharge the very tax dues that triggered the cancellation, requiring departmental verification of such credit before it can be utilised.

Sections Involved

  • Section 29(2) of the CGST/TNGST Act, 2017 — empowers cancellation of GST registration for continuous non-filing of returns.
  • Section 30 of the CGST/TNGST Act, 2017 — governs revocation of cancellation of registration.
  • Section 16/17 of the CGST Act, 2017 — eligibility and restrictions on utilisation of ITC, referenced in the conditions imposed.

Decision – In Favour of

Assessee. The cancellation of registration was revoked, subject to the conditions specified by the Court.

Case Details

Madurai Bench of the Madras High Court; W.P.(MD)No.36264 of 2025; Coram: Justice Krishnan Ramasamy; Order dated 18.12.2025.

Link to Download the Order

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