Legitimate Trade Should Not Be Crippled: Madras HC Allows Revival of GST Reg Following Suguna Cut Piece Centre Ruling [Read Order]

In a recent ruling, the Madras High Court, allowed the revival of a GST ( Goods and Services Tax ) registration that had been cancelled by the tax authorities.

The Court upheld the principles established in the seminal case of Tvl. Suguna Cut Piece Centre v. Appellate Deputy Commissioner (ST) (GST), Salem & Anr by holding that legitimate trade and commerce should not be severely hampered simply because of procedural errors.

The petitioner, Velu Ramakrishnan, proprietor of M/s V.R.K. Equipments, challenged the cancellation of his GST registration dated February 13, 2025, issued by the Commercial Tax Officer, Kundrathur Assessment Circle. The cancellation had disrupted his business operations, prompting the writ petition before the High Court under Article 226 of the Constitution of India.

Justice C. Saravanan, hearing the matter at the admission stage, noted that both the petitioner’s counsel and the Additional Government Pleader for the respondents agreed that the issue was directly covered by the Suguna Cut Piece Centre decision.

In that precedent, the Court had stated that the object of the GST Act is to levy and collect just tax from every assessee engaged in the supply of goods or services and not to stifle genuine trade through harsh administrative action.

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The Court said that “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.”

The Madras High Court directed that the petitioner be allowed to revive his cancelled GST registration, subject to strict conditions prescribed in the Suguna Cut Piece Centre judgment.

The Court mandated that the petitioner must first file all pending GST returns for the period prior to cancellation and remit the corresponding tax dues, along with applicable interest, penalty, and late fees, within a period of forty-five days.

Further, it was clarified that any unutilized input tax credit (ITC) shall not be used for such payments until it is duly verified and approved by the competent authority.

The Court also required the petitioner to discharge tax liabilities for the period after cancellation strictly in cash and to file accurate returns for that period. After fulfillment of these conditions and submission of necessary documents, it was directed to revive the GST registration.

Additionally, the Court directed the GST authorities to make suitable adjustments in the GSTN system architecture to facilitate such revival within 30 days of the order.

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