Safelane Agencies Vs Superintendent of GST and C. Ex (Madras High Court)
Summary: The Madras High Court disposed of two writ petitions filed by Safelane Agencies challenging an assessment order dated 30.08.2024 and an order dated 09.12.2025 rejecting its application for cancellation of GST registration. The petitioner submitted that the show cause notice dated 29.05.2024 proposed tax of only Rs.1,35,676/-, while the detailed assessment order and DRC 7 travelled beyond its scope. It also pointed out that DRC 7 failed to account for IGST payments of Rs.47,57,105/-, although the detailed order acknowledged and appropriated those payments against the confirmed demand. Comparing the documents, the Court found both objections substantiated.
The petitioner agreed to remit 50% of the tax demand specified in the notice, amounting to Rs.67,838/-, as a condition for remand. Subject to that payment, the Court set aside the assessment order and directed reconsideration after issuance of a fresh notice. The related bank attachment was also directed to be lifted upon fulfilment of the condition. Separately, the petitioner had sought cancellation of GST registration on 27.09.2025 because it had discontinued business.
The authorities rejected the application because a tax demand remained outstanding. The Court held that discontinuation of business is a ground for cancellation under Section 29(1)(a), while Section 29(3) preserves the authorities’ ability to recover outstanding amounts even after cancellation. Consequently, it set aside the rejection order and directed respondents 1 to 3 to reconsider the cancellation application in accordance with law. Both petitions were disposed of without costs, and connected miscellaneous petitions were closed.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
By these two writ petitions, assessment order dated 30.08.2024 and order dated 09.12.2025 rejecting the petitioner’s application for cancellation of GST registration are challenged.
2. Adverting to show cause notice dated 29.05.2024, learned counsel for the petitioner submits that said show cause notice only deals with a tax proposal of Rs.1,35,676/-, whereas the impugned detailed order travels beyond the show cause notice. With reference to the DRC 7, learned counsel submits that the DRC 7 also fails to take note of payments made by the petitioner in a sum of Rs.47,57,105/- towards IGST, which was taken note of in the detailed order. Without prejudice, learned counsel submits that the petitioner agrees to remit 50% of the demand of Rs.1,35,676/- in the show cause notice as a condition for remand. An endorsement has been made on the bundle to that effect.
3. Comparing the show cause notice with the impugned assessment orders, it is evident that both the detailed order and the DRC 7 travel beyond the scope of the show cause notice. The detailed order records that a sum of Rs.47,57,105/-, which was paid through the GSTR 3B belatedly, is appropriated towards the confirmed tax demand. The DRC 7 does not take note of this and, therefore, confirms the entire demand. In these circumstances, subject to the petitioner remitting 50% of the tax demand of Rs.1,35,676/-, the impugned assessment order is set aside and the matter is remanded for reconsideration. After issuing a fresh show cause notice, the respondent shall dispose of the matter in accordance with law. Subject to fulfillment of the above condition, the bank attachment relating to the impugned order shall be raised.
4. The petitioner had applied for cancellation of the registration on 27.09.2025 for reason that the petitioner had discontinued the business. Said application was rejected on the ground that there is an outstanding tax demand against the petitioner.
5. As submitted by learned counsel for the petitioner, discontinuation of business is one of the grounds for seeking cancellation under Section 29(1)(a). Even if such application were to be allowed, as per sub-section (3) of Section 29, it is open to respondents 1 to 3 to initiate proceedings to recover any outstanding amounts. Hence, the order of rejection is untenable and is set aside. As a consequence, respondents 1 to 3 are directed to re-consider the petitioner’s application for cancellation in accordance with law. Both these writ petitions are disposed of on these terms without any order as to costs. Consequently, connected miscellaneous petitions are closed.
