Case Law Details
Tvl. El Tech Power System Private Limited Vs Assistant Commissioner (ST) (Madras High Court)
The petitioner challenged a notice dated 27.02.2026 issued in Form GST REG-17 proposing cancellation of its GST registration and simultaneously suspending the registration with effect from 27.02.2026.
The records showed that the second respondent had recorded a statement from the petitioner under Section 67 of the TNGST Act, 2017 on 14.11.2025. Based on an inspection conducted on 13.11.2025 and the statement recorded on 14.11.2025, the first respondent issued the show cause notice dated 27.02.2026 proposing cancellation of the petitioner’s GST registration. A personal hearing was also scheduled for 05.03.2026.
The petitioner approached the High Court on 05.03.2026 challenging the notice. The Additional Government Pleader contended that the writ petition was premature.
The Court observed that the impugned notice proposed cancellation of the petitioner’s GST registration from the date of registration, namely 01.07.2017. However, the same notice also suspended the GST registration with effect from 27.02.2026.
The Court held that the suspension of the GST registration through the impugned show cause notice was unwarranted. Accordingly, the notice was quashed to the extent it suspended the petitioner’s GST registration.
The Court directed the respondent authorities to pass orders on the show cause notice after following the guidelines laid down in Tvl. Suguna Cut Piece Center v. The Appellate Deputy Commissioner (ST) (GST), Salem and another [(2022) 99 GSTR 386].
Referring to paragraphs 227 to 229 of the earlier decision, the Court reiterated that legitimate trade and commerce should be allowed to continue subject to payment of tax and statutory compliance. The Court also noted that taxpayers should be given an opportunity to regularize defaults, while the authorities may impose penalties depending on the gravity of the lapses.
The Court further observed that the directions issued in Suguna Cut Piece Center would apply to the present case as well. Those directions include filing pending returns, payment of tax, interest, penalty, fine and fees within the prescribed period, restrictions on utilization of input tax credit until scrutiny and approval, filing of returns for periods subsequent to cancellation, and revival of registration upon compliance with the prescribed conditions.
Accordingly, the writ petition was disposed of in terms of the directions issued in Suguna Cut Piece Center. The connected miscellaneous petition was closed and no costs were awarded.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
Mr.TNC. Kaushik, Additional Government Pleader, takes notice for the Respondents.
2. This Writ Petition is being disposed of at the stage of admission itself with the consent of the learned counsel for the Petitioner and the learned Government Pleader for the Respondents.
3. In this writ petition, the petitioner has challenged the impugned notice dated 27.02.2026 in form GST Reg-17, whereby the GST registration is proposed to be cancelled and has however suspended the GST Registration with effect from 27.02.2026. The petitioner is represented by the proprietor of the proprietary concern in the capacity as a Director.
4. The case on record reveals that the second respondent had recorded a statement under Section 67 of TNGST Act, 2017 from the petitioner on 14.11.2025. Pursuant to which the first respondent/ Assistant Commissioner ST has issued a Show Cause Notice on 27.02.2026 to the petitioner, based on the inspection carried on 13.11.2025, statement recorded on 14.11.2025.
5. It appears that the personal hearing was also fixed on 05.03.2026. While so, the petitioner has approached this Court by way of filing this writ petition on 05.03.2026.
6. The Additional Government Pleader submits that the writ petition is to be held as prematured .
7. The impugned Show Cause Notice in Form GST Reg-17 has been issued on 27.02.2026 to cancel the GST registration of the petitioner viz., the date of registration being i.e from 01.07.2017. However, the impugned Show Cause Notice has suspended the GST registration of the petitioner with effect from 27.02.2026. To the extent the suspension of the registration was unwarranted and therefore to that extent the Show Cause Notice stands quashed.
8. The respondent is directed to pass orders on the show cause notice issued to the petitioner by following the guidelines issued by this Court in Tvl.Suguna Cut Piece Center, Represented by its Authorized Signatory V. The Appellate Deputy Commissioner (ST) (GST), Salem and another [(2022) 99 GSTR 386], wherein, in Paragraph Nos.227 to 229, this Court has observed as under:-
“227. This is a fit case for exercising the power under Article 226 of the Constitution of India in favour of the petitioners by quashing the impugned orders and to grant consequential relief to the petitioners. By doing so, the Court is effectuating the object under the GST enactment of levying and collecting just tax from every assessee who either supplies goods or service. Legitimate Trade and Commerce by every supplier should be allowed to be carried on subject to payment of tax and statutory compliance. Therefore, the impugned orders deserve to be quashed.
228. These petitioners deserve a chance and therefore should be allowed to revive their registration so that they can proceed to regularize the defaults. The authorities acting under the Act may impose penalty with the gravity of lapses committed by these petitioners by issuing notice. If required, the Central Government and the State Government may also suitably amend the Rules to levy penalty so that it acts as a deterrent on others from adopting casual approach.
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.
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.”
9. The above said order will be applicable to the present writ petition also. Hence, this Writ Petition stands disposed of in terms of the directions issued in Tvl.Suguna Cut Piece Center referred to supra. Consequently, connected miscellaneous petition are closed. No costs.
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