Bombay HC Restores GST Registration as Returns Were Missed During COVID

Shriyaa Enterprises Vs State Tax Officer (Bombay High Court)

GST Registration Cancellation Quashed Subject to Payment of Dues; GST Registration Restored as No Fraud Was Alleged and Dues Were Agreed to Be Paid; Bombay High Court Grants Relief Because Non-Filing of GST Returns Was Linked to COVID Hardship; GST Cancellation Set Aside Since No Fraud Allegations Existed: Bombay High Court.

The Bombay High Court heard two writ petitions challenging orders cancelling the petitioners’ GST registrations on the ground that they had failed to file GST returns for approximately six months. In one petition, the period of non-filing was from March to August 2021, while in the other it was from December 2020 to June 2021. The petitioners explained that the defaults occurred during the period affected by the COVID-19 pandemic. One petitioner had undergone cardiology-related medical procedures, while the other, his wife, stated that severe financial constraints prevented timely filing of returns. The petitioners submitted that they were ready and willing to pay all outstanding dues, including any dues up to date, within 15 days of receiving an intimation from the GST authorities. They also contended that cancellation of GST registration would benefit neither the taxpayers nor the authorities, as they intended to continue their business of trading in building materials in accordance with law.

The petitioners relied on the High Court’s earlier decision in Azaria Cor LLP, where GST registration had been restored in similar circumstances subject to payment of outstanding dues, late fees and interest. The respondents argued that the petitioners ought to have exercised greater diligence in complying with their statutory obligations. However, when questioned by the Court, the respondents confirmed that there were no allegations that the petitioners had engaged in fraudulent transactions or any unlawful business activities.

The Court noted that the petitioners, who are husband and wife, had admitted their failure to file GST returns for the relevant periods. It observed that the defaults occurred during or close to the period affected by the COVID-19 pandemic and accepted that the explanation relating to the husband’s heart condition and the family’s financial difficulties did not appear to be mala fide or unreasonable. The Court also noted the absence of any allegation that the petitioners had attempted to defraud the GST authorities or were otherwise engaged in unlawful business activities.

Following the reasoning adopted in Azaria Cor LLP and the precedents referred to therein, the Court restored the cancelled GST registrations subject to specified conditions. It directed the concerned authorities to intimate the petitioners in writing within 15 days of uploading the order regarding the dues, late fees and interest payable. The petitioners were directed to pay the demanded amount within 15 days of receiving such intimation. If no intimation was issued within the prescribed period, or if the petitioners made payment within 15 days of receipt of the intimation, the cancellation orders dated 27 October 2021 and 29 October 2021 would automatically stand quashed and set aside, without prejudice to the respondents’ right to recover any dues. However, if the petitioners failed to make the payment within the stipulated period after receiving the intimation, the writ petitions would stand dismissed without any further reference to the Court. The Rule was made absolute in both petitions, with no order as to costs.

FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT

1. Heard Mr. Shah, learned counsel for the petitioner in both these petitions. Mr. Takke, appears for the State Government Authorities in Writ Petition (L) No. 14505 of 2025 and Mr. Mishra, learned counsel for the State Government authority in Writ Petition (L) No. 15116 of 2025, Mr. Chandrashekhar, at the request of the Court, appears on behalf of the Central Government authorities (Respondent No. 1 and 3 in Writ Petition (L) No. 15116 of 2025).

2. We issue Rule in these petitions.

The Rule is made returnable immediately at the request of and with the consent of the learned counsel for the parties.

3. The challenge in both these petitions is to the orders cancelling the petitioner’s registration under the GST Act. The cancellation was due to the petitioner’s failure to file returns for almost six months.

4. Mr Shah, learned counsel for the petitioner, submits that non-filing of returns was during the period from March to August 2021 (in Writ Petition (L) No. 14505 of 2025) and December 2020 to June 2021 (in Writ Petition (L) No. 15116 of 2025). These were the periods affected by the COVID-19 pandemic. He submitted that the petitioner in Writ Petition (L) No. 14505 of 2025 underwent some medical procedures relating to cardiology. The petitioner in the other petition is the wife of the petitioner in Writ Petition (L) No. 15116 of 2025; due to severe financial constraints, the returns could not be filed.

5. Mr Shah, on instructions, states that the petitioners are ready and willing to pay all dues for the period mentioned above or dues, if any, up to date, within 15 days of receipt of an intimation from the concerned GST authorities. He submitted that the cancellation of GST would benefit neither the petitioners nor the GST authorities. The petitioners are interested in carrying on their business of trading in building materials, in accordance with due process of law.

6. Mr Shah submitted that in similar circumstances, this Court has granted relief to the other petitioners. He relied on the case of Azaria Cor LLP Vs. The Deputy Commissioner of State Tax & Anr¹, which disposed of this petition, and also other orders referred to in the said order.

7. Learned counsel for the respondents submit that the petitioners should have been more diligent in this matter.

8. However, in response to the Court’s query regarding any hint of the petitioners engaging in fraudulent transactions, learned counsel for the parties submitted that there were no such allegations against the petitioners.

9. The rival contentions now fall for our determination.

10. The petitioners, who are husband and wife, have admitted to the lapse of not filing GST returns for the six months referred to by Mr Shah.

11. The above periods were proximate to and even falling within the period affected by Covid COVID-19 pandemic. The husband was afflicted with a heart condition, and the explanation about severe financial strength does not appear to be mala fide or even unreasonable.

12. There are no allegations about the petitioner otherwise indulging in any unlawful business activities or attempting to defraud the GST authorities.

13. In the case of Azaria Cor LLP (supra), this Court, in similar circumstances, had restored the cancelled registration subject to the petitioner paying all dues, whether together with late fee and interest. Even in this case, the petitioners have agreed to pay all the dues, including late fees and interest.

14. Accordingly, by following the reasoning in Azaria Cor LLP (Supra) and the other precedents referred to in paragraph 7 of the said decision, and applying the same to the peculiar facts of these matters, we dispose of these petitions by making the following order:-

ORDER

a. Within 15 days of uploading of this order, the concerned authorities must intimate the petitioners in writing the status of dues, late fee and interest payable by them. Within 15 days of receipt of such intimation, the petitioners must pay the demanded amount.

b. If no intimation is sent within 15 days or if the petitioner makes the payment within 15 days of the receipt of intimation, then the impugned orders of cancellation of the petitioner’s registration dated 27 October 2021 and 29 October 2021 shall stand quashed and set aside, without prejudice to the right of the respondents to recover the dues, if any.

(c) However, if the petitioners fail to pay the amount demanded within 15 days of the receipt of intimation from the respondent, then these petitions shall stand dismissed without any further reference to this Court.

15. The rule is made absolute in both these petitions in the above terms. No costs.

16. All concerned must act on an authenticated copy of this order.

¹Writ Petition No. 443 of 2025 decided on 28 September 2025