Case Law Details
Presannaraj Vs Superintendent of GST and Central excise (Madras High Court)
Madras High Court has ruled to set aside the suo motu cancellation of a Goods and Services Tax (GST) registration belonging to Presannaraj, the petitioner, which had been cancelled due to the continuous non-filing of statutory returns for over six months. The court’s decision, delivered on June 9, 2025, follows a consistent line of judgments, primarily relying on the principles established in the seminal case of Tvl. Suguna Cutpiece Center Vs. Appellate Deputy Commissioner (ST) (GST) and others.
The petitioner had approached the court challenging the cancellation of GST Registration No:33HHBPP7912R1ZN, which was effected under Section 29(2) of the Central Goods and Services Tax (CGST) Act. The primary grievance stemmed from the automatic cancellation of the registration on the grounds of non-compliance with return filing obligations. The petitioner also sought a secondary direction for the first respondent, the Superintendent of GST and Central Excise, to ensure that GST amounts allegedly due to the petitioner from a second respondent were duly paid.
During the proceedings, both the learned counsel for the petitioner and the learned Senior Standing Counsel for the first respondent acknowledged that the core issue of GST registration cancellation over non-filing of returns was well-covered by previous judicial pronouncements of the Madras High Court. This consensus paved the way for a swift final disposal of the writ petition, even at the admission stage.
The cornerstone of the High Court’s decision is its consistent adherence to the directions laid down in the Tvl. Suguna Cutpiece Center case. In that judgment, the court had elaborated on the conditions under which GST registration cancellations, under similar circumstances, could be revoked. The Madras High Court reiterated these conditions, which are critical for taxpayers seeking reinstatement of their GST registration.
According to the established precedent, petitioners are mandated to file all pending returns for the period prior to the cancellation of registration. This must be accompanied by any tax defaulted during that period, along with applicable interest for belated payments, and any fines or fees stipulated for delayed return filing under the provisions of the Act. A crucial caveat emphasized by the court is that such payments of tax, interest, fine, or fees are strictly not to be made or adjusted from any Input Tax Credit (ITC) that might be lying unutilized or unclaimed with the petitioners.
Furthermore, any unutilized ITC is to remain frozen and cannot be used until it has been thoroughly scrutinized and approved by an appropriate or competent officer of the Department. Only after such approval can the ITC be utilized for discharging future tax liabilities. The court also requires petitioners to pay GST and file returns for the period subsequent to the registration cancellation, ensuring that the correct value of supplies is declared and that GST payments are made strictly in cash. Similar to the pre-cancellation period, any ITC earned post-cancellation can only be utilized after scrutiny and approval by the authorities.
To safeguard against potential misuse or “bill trading” activities, the respondents are empowered to impose necessary restrictions or limitations on petitioners. Moreover, the court directed the respondents to liaise with GST Network, New Delhi, to implement architectural changes in the GST Web portal to facilitate these petitioners in filing their returns and making the requisite payments. The entire exercise, including the revival of registration upon payment and uploading of returns, is to be completed within a specified timeframe.
However, the Madras High Court did not grant the petitioner’s secondary prayer seeking a direction to the first respondent to ensure the payment of GST amounts allegedly due from the second respondent. The court declined to pass any order in this regard, asserting that if the second respondent fails to remit any GST dues, the petitioner remains liable to pay. It was clarified that it is up to the first respondent, the tax authority, to initiate separate legal proceedings for any demand of GST amount that was previously collected from the petitioner. This part of the ruling underscores that the court’s intervention is primarily focused on rectifying the registration status based on compliance, rather than adjudicating inter-party payment disputes concerning GST collected.
The verdict in Presannaraj’s case thus exemplifies the judiciary’s approach to balancing strict compliance with tax laws against the need to provide opportunities for taxpayers to rectify omissions. By leveraging its earlier judgments, particularly the Suguna Cutpiece Center ruling, the Madras High Court continues to shape the operational landscape for GST taxpayers, ensuring that while non-compliance has consequences, avenues for course correction exist, albeit under stringent conditions aimed at protecting revenue interests.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
By consent of both sides, this writ petition is taken up for final disposal at the stage of admission itself.
2. The present Writ Petition is filed challenging the order of the Suo Motto cancellation of the GST Registration No:33HHBPP7912R1ZN of the Petitioner on the premise that the statutory returns has not been filed for a continuous period of more than six months, thereby invoking Section 29(2) of CGST Act and consequential direction to the 1st Respondent to ensure that the GST amount due to this petitioner by the 2nd Respondent is paid accordingly.
3. At the outset, it is submitted by both the learned Counsel for the petitioner as well as the learned Senior Standing Counsel for the first Respondent that the issue stands covered by a series of judgments, commencing with the decision in Tvl.Suguna Cutpiece Center Vs. Appellate Deputy Commissioner (ST) (GST) and others, wherein, under identical circumstances, this Court has directed the revocation of registration subject to conditions.
4. This Court has been consistently following the directions issued in Tvl. Suguna Cutpiece Center’s case. The relevant portion of the order is extracted hereunder:
“229. In the light of the above discussion, these Writ Petitions are allowed subject to the following conditions:
i. The petitioners are directed to file their returns for the period prior to the cancellation of registration, if such returns have not been already filed, together with tax defaulted which has not been paid prior to cancellation along with interest for such belated payment of tax and fine and fee fixed for belated filing of returns for the defaulted period under the provisions of the Act, within a period of forty five (45) days from the date of receipt of a copy of this order, if it has not been already paid.
ii. It is made clear that such payment of Tax, Interest, fine / fee and etc. shall not be allowed to be made or adjusted from and out of any Input Tax Credit which may be lying unutilized or unclaimed in the hands of these petitioners.
iii. If any Input Tax Credit has remained utilized, it shall not be utilised until it is scrutinized and approved by an appropriate or a competent officer of the Department.
iv.Only such approved Input Tax Credit shall be allowed for being utilized thereafter for discharging future tax liability under the Act and Rule.
v. The petitioners shall also pay GST and file the returns for the period subsequent to the cancellation of the registration by declaring the correct value of supplies and payment of GST shall also be in cash.
vi. If any Input Tax Credit was earned, it shall be allowed to be utilised only after scrutinising and approving by the respondents or any other competent authority.
vii. The respondents may also impose such restrictions / limitation on petitioners as may be warranted to ensure that there is no undue passing of Input Tax Credit pending such exercise and to ensure that there is no violation or an attempt to do bill trading by taking advantage of this order.
viii. On payment of tax, penalty and uploading of returns, the registration shall stand revived forthwith.
ix. 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 these petitioners to file their returns and to pay the tax/penalty/fine.
x. The above exercise shall be carried out by the respondents within a period of thirty (30) days from the date of receipt of a copy of this order.
xi. No cost.
xii. Consequently, connected Miscellaneous Petitions are closed.”
5. In view thereof, the benefit extended by this Court vide its earlier order in Suguna Cutpiece Centre’s case cited supra, may be extended to the petitioner.
6. As far as the second portion of the prayer sought for by the petitioner for a direction to the first respondent to ensure that the GST amount due to this petitioner by the 2nd respondent is paid. This Court is not inclined to pass any order in this regard. Accordingly, the second portion of the prayer has been rejected. In the event, the second respondent failed to remit any GST dues, the petitioner is liable to pay. It is upto the first respondent to issue separate legal proceedings for any demand of GST amount, which was collected from the
petitioner already.
7. With the above observations and directions, this Writ Petition is disposed of. No costs. Consequently, connected Miscellaneous Petitions are closed.
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