Cancelling GST Registration for Temporarily Closing Business and Travelling Abroad during Diwali: Madras HC Restores Registration [Read Order]

In a rather bizarre event, the Madras High Court safeguarded the rights and restored the Goods and Services Tax (GST) Registration of a business owner whose registration was cancelled by the authorities upon notice that the business had been closed for a period of almost 2 weeks during the Diwali holidays.

The decision was given by the Madras High Court while adjudicating a Writ Petition and Writ Miscellaneous Petition filed by M/s.Golden Enterprises against the cancellation order issued by the Assistant Commissioner, Trichy Road, Coimbatore.

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The Respondent revenue issued a show cause notice on 06.11.2024, proposing the cancellation of the registration for the reason that the petitioner has not conducted any business in the declared place of business against which the petitioner filed detailed response on 13.11.2024.

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The Petitioner, in their reply to notice had averred that the petitioner’s proprietor had travelled abroad during the Diwali holidays. This, coupled with the fact that the business was doing particularly slow at the point of time prompted the owners to close the business for 15 days.

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However, the Revenue disregarded the submission and passed an order of cancellation on 27.01.2025 leading to the present petition.

Aparna Nandakumar, appearing for the Petitioner, averred that the Department had passed the order cancelling the Petitioner's GST registration without any application of mind and prayed to set aside the same.

Meanwhile, K.Vasanthamala, Government Advocate (Taxes) representing The Assistant Commissioner opposed the plea contending that the cancellation order had been passed only after duly  considering the reply filed by the petitioner and prayed for appropriate orders in thai regard.

A single-judge Bench of Justice Krishnan Ramasamy noted that the petitioner had consistently paid taxes and filed GST returns throughout the tenure of business. The Madras High Court Bench further observed that the authorities had failed to ascertain whether the business was still functional before proceeding with the cancellation. Accepting the petitioner’s explanation that the business was closed temporarily for the Diwali holidays, the Court found the cancellation order to be unjustified.

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Accordingly, the Bench set aside the cancellation order while directing the GST department to restore the petitioner’s registration and to ensure that the GST portal allowed the petitioner to file returns and pay any outstanding tax, interest, or penalties within one week of the order. The Court also mandated the petitioner to file all pending returns within four weeks of restoration.

In closing, the Bench directed that the Petitioner may not be eligible to utilize any Input Tax Credit (ITC) earned without being scrutinized and approved by the department. It further ruled that failure to comply with the order’s conditions would result in automatic cessation of the relief granted.

To Read the full text of the Order CLICK HERE

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