AGN Lorry Service Vs Commercial Tax Officer
Date: June 4, 2025
Subject Matter
Restoration of Cancelled GST Registration Ordered. Business Slowdown as 'Genuine Reason' Acknowledged
Summary
This writ petition was filed challenging an order dated April 12, 2024, which canceled the petitioner's GST registration. The petitioner, a registered taxpayer, had failed to file returns from April 2023 onward due to a business slowdown and the cancellation of major orders. As a result, the respondent-department issued a show cause notice on October 11, 2023, and subsequently canceled the registration. The petitioner claimed they were unaware of the electronic notice because a physical copy was not served. By the time the petitioner became aware of the cancellation, the time limit for filing an application for revocation and a statutory appeal had expired.
The petitioner's counsel stated that the petitioner is willing to file all pending returns and pay all dues in order to restart the business. The learned Government Advocate for the respondent acknowledged the non-compliance but stated that restoration would be considered only upon the payment of all dues and the filing of all returns.
The High Court considered the petitioner's reason for non-compliance—a business slowdown—to be genuine. The court decided to set aside the cancellation order on certain conditions to allow the petitioner to resume their business.
The court set aside the impugned order dated April 12, 2024, subject to the petitioner complying with the following conditions:
The petitioner must pay a cost of Rs. 10,000/- to the Principal Government Naturopathy Medical College and Hospital within two weeks. The order setting aside the cancellation will take effect upon this payment.
Upon production of proof of this payment, the respondents must instruct the GST Network to restore the petitioner's registration, allowing them to file returns.
The petitioner is directed to file all pending returns and pay all tax dues, interest, and late fees within four weeks of the registration's restoration.
The petitioner is not permitted to use any unutilized or unclaimed Input Tax Credit (ITC) to pay these outstanding dues.
Any unutilized ITC must be scrutinized and approved by a competent officer before it can be used for future tax liabilities.
The writ petition was disposed of with these directions, and the benefit granted will automatically cease if the petitioner fails to comply with any of the conditions.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
The challenge in this writ petition is to the order dated 12.04.2024 passed by the respondent, cancelling the GST registration of the petitioner and further direct the respondent to restore and activate the registration of the petitioner.
2. Mrs. K.Vasanthamala, learned Government Advocate (Taxes), takes notice on behalf of the respondent.
3. By consent of the parties, the main Writ Petition is taken up for disposal at the time of admission stage itself.
4. The learned counsel for the petitioner submitted that the Petitioner is a registered tax payer under the GST enactments and they have been filing the GST returns regularly upto financial year 2022-23, however, due to cancellation of certain major orders during 2023, the Petitioner could not file its returns from April 2023 onwards. Consequently, the respondent issued a show cause notice on 11.10.2023, proposing the cancellation of the GST registration for non-filing of returns for a continuous period of six months, and subsequently passed an order of cancellation on 12.04.2024. The learned counsel for the petitioner further submits that since the show cause was uploaded in the GST portal, without serving physical copy of the same to the petitioner, the petitioner was not aware of the same and hence could not file its reply, which resulted in passing of the impugned order. Thereafter, with a view to restart the business, the petitioner has filed the monthly returns upto the date of cancellation of the GST registration. However, since the GST registration was cancelled the petitioner is unable to restart its business. That apart the time limit for filing an application for revocation of cancellation and for filing appeal have also expired. He therefore prays to set aside the impugned order and direct the respondent to restore and activate the GST registration of the petitioner.
5. On the other hand, the learned Government Advocate (Taxes) appearing for the respondent submitted that the petitioner did not file returns for a continuous period of six months, which led to the passing of the impugned order. He further submitted that the revocation of the cancellation of registration will be considered only upon payment of all dues and filing of all returns.
6. Heard the learned counsel on either side and perused the materials available on record.
7. Admittedly, the GST registration of the petitioner was cancelled due to non-compliance in filing returns. Furthermore, the time limit for filing an application for revocation of the cancellation and also for filing statutory appeal against the cancellation order had also expired, and the petitioner stated that due to slowdown in the business of the Petitioner, they could not pay GST dues and file the returns. Therefore, this Court is of the view that the reason provided by the petitioner for non-compliance with the relevant provisions of the Act within the stipulated time appears to be genuine.
8. In view of the above, restoration of the GST registration is subject to and conditional upon fulfilling the following conditions :
(i) The impugned order dated 12.04.2024 is set aside subject to the payment of a sum of Rs.10,000/- to the Principal Government Naturopathy Medical College and Hospital, Account No.7883022723, IFSC Code: IDIB000M157, within a period of 2 weeks from the date of receipt of copy of this order and the setting aside of the impugned order will take effect from the date of payment of the said amount.
(ii) Upon production of proof with regard to the payment of a sum of Rs.10,000/- as stated above, the respondents shall take suitable steps by instructing GST Network, New Delhi to make suitable changes in the architecture of the GST Web portal to allow the petitioner to file the returns and to pay the tax/penalty/fine, within a period of four weeks.
(iii) The petitioner is directed to file returns for the period till date, if not filed, together with tax dues along with interest thereon and the fee fixed for belated filing of returns within a period of 4 weeks from the date of restoration of GST Registration of the petitioner.
(iv) It is made clear that such payment of tax, interest, fine/fee etc., shall not be allowed to be made or adjusted from and out of any Input Tax Credit (ITC) which may be lying unutilized or unclaimed in the hands of the petitioner.
(v) If any ITC has remained unutilized, it shall not be utilised until it is scrutinized and approved by an appropriate or competent officer of the Department.
(vi) Only such approved ITC shall be allowed to be utilized thereafter for discharging future tax liability under the Act and Rules.
(vii) If any ITC was earned, it shall be allowed to be utilised only after scrutinizing and
(viii) If any of the aforesaid conditions is not complied with by the petitioner, the benefit granted under this order will automatically ceased to operate.
9. With the above directions, this writ petition is disposed of. No costs. Consequently, connected miscellaneous petitions are closed.