In a recent ruling, the Madras High Court has quashed the order cancelling Goods and Services Tax ( GST ) registration as the Show Cause Notice ( SCN ) was issued prematurely in August 2022, before the completion of the six-month non-filing period and the assessee filed the pending Goods and Services Tax Returns ( GSTR ) upon receipt of the SCN.
The petitioner, engaged in sub-contracts within the construction and real estate sector, encountered a dispute regarding their GST registration. Despite regular filing of returns until March 31, 2022, the petitioner ceased business operations thereafter, leading to a lapse in return filing.
Subsequently, a SCN dated 23.08.2022 was issued, alleging non-filing of GSTR 3B returns. In response, the petitioner filed GSTR for April to July 2022-2023, remedying the alleged non-compliance. However, the impugned cancellation order was issued on 28.11.2022.
Counsel for the petitioner argued that Section 29 of applicable GST laws allows cancellation of registration only after six consecutive months of non-filing, which had not transpired at the time of the show cause notice. They further contend that the subsequent filing of returns rectified the purported non-compliance, rendering the cancellation order unsustainable.
Mr. Prasanth Kiran, representing the respondent, acknowledged receipt of notice and disputes the petitioner’s claim, stating that returns for April to July 2022-2023 are not on record. He asserted that the cancellation order was issued in November 2022 while the petitioner allegedly continued business but filed nil returns.
Considering the submissions, a Single bench of Justice Senthilkumar Ramamoorthy noted that the SCN was issued prematurely in August 2022, before the completion of the six-month non-filing period. Additionally, the petitioner’s subsequent filing of returns for April to July upon receiving the notice rectified the alleged breach. Consequently, the court quashed the cancellation order and restored the petitioner’s GST registration.
As a result, writ petition was allowed, and the petitioner’s GST registration was reinstated. Connected miscellaneous petitions were closed, with no costs imposed.
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