Case Law Details
Pixel Trading & Services Vs Superintendent (Kerala High Court)
Pixel Trading & Services, a registered taxpayer under the CGST/KGST Acts, 2017, filed a writ petition before the Kerala High Court after discovering that its GST registration had been cancelled erroneously. The petitioner claimed that it had been regularly filing returns and paying taxes without any default. On 25.07.2025, one of its suppliers informed the petitioner that e-way bills could not be generated for supplies due to the cancellation of registration. Upon inquiry, it was revealed that the cancellation order was effective from 22.06.2025 and issued on 25.07.2025 based on an application submitted mistakenly by the petitioner’s GST consultant. The consultant, acting on instructions intended to cancel the registration of a sister concern, M/s. Pixel Mobiles, had erroneously submitted a cancellation request on behalf of Pixel Trading & Services.
Following the cancellation, the petitioner submitted a request for reinstatement of its registration, supported by affidavits from both the GST consultant and the firm’s partners. The 1st respondent, however, rejected the request, citing the absence of any statutory provision to withdraw a cancellation order. Consequently, the petitioner sought relief from the Kerala High Court, including a writ of mandamus to reinstate the registration, a declaration that the cancellation resulted from a bona fide mistake, and any other appropriate orders.
During proceedings, the petitioner’s counsel emphasized that the cancellation application was submitted in error and intended for the sister concern. Reference was also made to the Supreme Court’s observations in S.L.P. (C.) No. 6332 of 2025 (Central Board of Indirect Taxes and Customs v. M/s. Aberdare Technologies Pvt. Ltd.), which recognized the need for rectification of bona fide mistakes in tax matters. The respondents, represented by the Standing Counsel, contended that no provision allowed them to entertain the reinstatement request.
The Court examined the records and statutory provisions and noted that although no explicit provision empowered the respondents to correct the error, the facts indicated a bona fide mistake. The petitioner had continued filing returns and paying taxes even after the cancellation date. The Court found it highly improbable that a diligent taxpayer would voluntarily cancel its registration while actively conducting business. The separate GST registration for the sister concern further corroborated the petitioner’s claim of error.
The Court also relied on the Supreme Court’s guidance in Aberdare Technologies Pvt. Ltd., which emphasized that timelines for correcting bona fide errors should be realistic and that taxpayers should not be penalized for human errors. Denial of correction could result in double payment of taxes and unfair prejudice to the taxpayer, whereas software or procedural limitations cannot justify refusal of rectification.
Considering the evidence and circumstances, the Kerala High Court concluded that the cancellation of registration arose from a genuine mistake by the petitioner’s agent and that there was no prejudice to the State. Exercising its powers under Article 226 of the Constitution, the Court quashed the cancellation order (Ext.P3) and directed the respondents to reinstate the petitioner’s GST registration from 22.06.2025. The petitioner also agreed to pay any interest or penalties arising from delayed tax payments due to the error, which the Court recorded. This ruling enabled the petitioner to regularize its transactions post-cancellation and ensured proper revenue collection without penalizing the taxpayer for an inadvertent mistake.
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
The petitioner is a registered tax payer under the provisions of the CGST/KGST Acts, 2017. According to the petitioner, the petitioner was regularly submitting returns and paying tax without any default. While so, on 25.07.2025, one of its suppliers informed the petitioner that they are not able to generate e-way bills for the supplies made to the petitioner in terms of the orders placed by them, as the system shows that the registration of the petitioner has been cancelled. On enquiry with the authorities concerned, it was revealed that the registration of the petitioner was cancelled with effect from 22.06.2025 as per the order dated 25.07.2025 on the application submitted by the petitioner itself.
2. As the petitioner was surprised to take note of this fact, a further enquiry was conducted, which revealed that the GST Consultant engaged by the petitioner, erroneously acting upon on the instruction given by the petitioner to cancel the registration of GST for M/s. Pixel Mobiles, a sister concern of the petitioner, submitted an application for cancellation of the registration of the petitioner, M/s. Pixel Trading and Services, a partnership firm.
3. This was acted upon by the 1strespondent, and Ext.P3 order was passed, cancelling the registration of the petitioner with effect from 22.06.2025. On realizing this mistake, the petitioner submitted an Ext.P4 request, for reinstating the registration of the petitioner, by explaining that the application was mistakenly submitted on behalf of the petitioner partnership firm. In support of Ext.P4, Ext P5 affidavit of the GST consultant and Ext.P6 affidavit sworn by the partners of the petitioner firm were also produced. However, the 1st respondent passed Ext.P7 order, rejecting the request placed by the petitioner as per Ext.P4, on the ground that there is no provision to withdraw the order of cancellation of registration.
4. This writ petition is submitted by the petitioner in such circumstances, seeking the following reliefs:
i. Issue a Writ of Mandamus directing the respondents to reinstate Ext.P1 Registration Certificate with effect from 22.06.2025:
ii. Issue appropriate orders declaring that Ext.P3 order had resulted from a bonafide mistake:
iii. Issue such other orders/directions as the Petitioner may pray for and this Court may deem fit to grand in the circumstances of the case:
5. I have heard learned counsel for the petitioner and the learned Standing Counsel for the respondents.
6. The learned counsel for the petitioner, reiterated the contention that the application for cancellation of the registration, which culminated in Ext.P3 order, was submitted mistakenly, and the same was intended to cancel the registration of M/s. Pixel Mobiles, a sister concern of the petitioner, M/s. Pixel Trading and Services a partnership firm. The learned counsel also brought the attention of this Court, to the observations made by the Hon’ble Supreme Court in S.L.P. (C.) No. 6332 of 2025 (Central Board of Indirect Taxes and Customs v. M/s. Aberdare Technologies Pvt. Ltd and others), wherein, certain observations were made, with regard to the rectification of bonafide mistakes.
7. On the other hand, learned Standing Counsel for the respondents opposes the said contentions by highlighting the fact that, there is no provision for the respondents to entertain a request as made before the 1st respondent in the form of Ext.P4.
8. I have carefully gone through the records and the relevant statutory provisions. Of course it is true that there is no specific provision that enables the respondents to entertain an application that contains the relief sought in Ext.P5. However, on an overall consideration of the entire facts and the materials before this Court, I find some merits in the submissions made by the learned counsel for the petitioner with regard to the mistaken submission of application for cancellation of registration. There is no dispute with regard to the specific contention raised by the petitioner that they were regularly filing returns and paying the tax, even after 22.06.2025, the date from which the cancellation of registration came into effect, as per Ext.P3 order dated 25/07.2025, until the said order was passed. I also do not find any reason to disbelieve the petitioner, with regard to the contentions raised in this writ petition, as it is highly unlikely that a prudent tax payer would submit an application for cancellation of the registration, at a time when they are in regular business. The fact that there is a separate GST registration for M/s. Pixel Mobiles is also not in dispute.
9. It is also to be noted in this regard, in a matter to some extent similar to the facts of this case, the Hon’ble Supreme Court, made the following observations in the case of M/s. Aberdare Technologies Pvt. Ltd. (supra), which reads as follows:
The petitioner, Central Board of Indirect Taxes and Customs, must re-examine the provisions/timelines fixed for correcting the bonafide errors. Time lines should be realist as lapse/defect variably is realized when input tax credit is denied to the purchaser when benefit of tax paid is denied. Purchaser is not at fault, having paid the tax amount. He suffers because he is denied benefit of tax paid by him. Consequently, he has to make double payment. Human errors and mistakes are normal, and errors are also made by the Revenue. Right to correct mistakes in the nature of clerical or arithmetical error is a right that flows from right to do business and should not be denied unless there is a good justification and reason to deny benefit of correction. Software limitation itself cannot be a good justification, as software are meant ease compliance and can be configured.
10. Thus it is evident that, a bonafide mistake has occurred on the part of the petitioner, which resulted in cancellation of registration. It is also a fact that, the respondents are not clothed with any power to recall the order of cancellation, since the cancellation was made acting upon the application submitted by the petitioner. Therefore, I find that, this is a matter which requires interference at the instance of this Court by invoking the extra ordinary powers of this Court under Article 226 of the Constitution of India. This is only to ensure that, a tax payer, who was otherwise continuing its business by following the statutory procedure, continues its business and its rights are not denied, merely because of a bonafide mistake committed by one of its agents. Moreover, I do not find any loss or prejudice being caused to the State, while granting the relief sought in this writ petition, but on the other hand, it would enable the petitioner, to regularize the transactions which the petitioner had carried out during the period, after issuance of Ext.P3 and thereby to ensure the receipt of proper revenue to the Government as well.
In such circumstances in exercise of powers of this Court under Article 226 of Constitution of India, it is ordered that Ext.P3 shall stand quashed and the respondents are directed to restore the registration of the petitioner, from the date from which it was cancelled, i.e., on 22.06.2025. At this stage, the learned counsel for the petitioner submitted that, the petitioner is ready to pay the interest and penalty, if any, payable on account of the delayed payment of tax, due to the mistake committed. The said submission is recorded and the same shall be complied with by the petitioner.
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