Case Summary
Case Title: M/s Bhagwati Construction v. State of Gujarat & Ors.
Court: High Court of Gujarat at Ahmedabad
Petition No.: R/Special Civil Application No. 766 of 2025
Date of Judgment: 03 April 2025
Category of Dispute: Cancellation of GST Registration / Revocation / Limitation
Relevant Sections: Section 107(4), Section 29 of the CGST Act, 2017; Rule 23 of CGST Rules
Facts (Paras 3–16)
The petitioner, engaged in scaffolding and dismantling services, was registered under GST. Initially, a cancellation notice was issued in 2018 for non-filing of returns, but the registration was later restored. The sole proprietor passed away in December 2019, and his widow, an uneducated housewife, was unaware of GST compliances. Post demise, ex-parte orders under ASMT-10, DRC-01A, and DRC-07 were issued. A fresh cancellation notice was issued in November 2022 on grounds of alleged fraud and suppression. Since the widow was unaware of proceedings, the order of cancellation dated 21.11.2022 was passed ex-parte. An appeal filed belatedly under Section 107 was rejected by the Appellate Authority on limitation.
Questions Before the Court (Paras 17–20)
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Whether the cancellation of registration could be sustained when notices were allegedly not effectively served upon the legal heir of the deceased proprietor.
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Whether the petitioner, being a legal heir, could be permitted to regularize registration despite limitation in filing appeal under Section 107(4).
Observations (Paras 21–26)
The Court noted that the show cause notice was cryptic and cancellation order referred to different grounds. Importantly, the legal heir had no knowledge of GST processes, and the business was being continued informally by her brother-in-law. The appellate authority was correct in holding that it had no power to condone delay beyond the statutory limit under Section 107(4). However, in the interest of justice and trade, the Court emphasized that the legal heir should not be left remediless merely due to death of the proprietor.
Judgment (Paras 27–28)
Without entering into the merits of service of notice, the Court permitted the petitioner (widow of deceased proprietor) to file an application for revocation of cancellation of registration within one week. The department was directed to decide such application within four weeks after granting an opportunity of hearing. The petition was disposed of accordingly.
Table of Cases Referred
| Case Name | Citation | Verdict / Ratio |
|---|---|---|
| M/s Bhagwati Construction v. State of Gujarat | SCA 766/2025 (Gujarat HC) | Registration cancellation allowed to be contested afresh through revocation; legal heir permitted to regularize compliance. |
(No external precedents cited in the order, only statutory provisions discussed.)
Between Fine Lines
For businesses run as proprietorships, the death of a proprietor creates procedural gaps under GST. This judgment clarifies that legal heirs cannot be penalized outright for non-compliance beyond their knowledge. Instead, authorities must allow them to revive registration and bring the business into compliance, provided an application for revocation is filed promptly.
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