GST registration directed to be restored as Court found cancellation orders cryptic and violative of natural justice principles

Case Reference:
Sree Venkateswara Medical vs The Commercial Tax Officer & Anr
Madurai Bench of Madras High Court
W.P.(MD) No. 31512 of 2024 (along with Nos. 26392 & 26393 of 2024)
Date of Judgment: 02.01.2025
Hon’ble Justice: Mr. K. Kumaresh Babu
Relevant Sections: Section 29(2) of the CGST/TNGST Act, 2017
Category: Revocation of GST Registration / Natural Justice

Facts (Para 2–3):

The petitioner, Sree Venkateswara Medical, challenged the cancellation of its GST registration issued under Section 29(2) of the CGST Act for non-filing of returns for six consecutive months. The petitioner submitted that the required returns had since been filed, taxes duly paid, and it was ready to pay any further dues including interest and late fees. The grievance centered on the fact that the cancellation order was passed mechanically without providing reasonable opportunity or considering compliance submissions.

Questions before the Court:

Whether the cancellation of registration for delay in filing returns, without due consideration of subsequent compliance and payment, is sustainable in law and consistent with principles of natural justice?

Observations (Para 4–6):

The Court noted that the issue was already settled through a consistent line of judgments beginning with Tvl. Suguna Cutpiece Center v. Appellate Deputy Commissioner (ST) (GST), where registration cancellations under similar circumstances were ordered to be revoked subject to compliance. The Court extracted the conditions from Suguna Cutpiece Center (para 229) which require the taxpayer to file pending returns, pay all dues with interest and late fee within 45 days, and restrict the use of unverified ITC until approved by the authorities. It further directed the department to instruct the GST Network to allow filing of returns and revival of registration post-compliance.

Judgment (Para 6–7):

Following the precedent, the Madras High Court extended the same benefit to the petitioner, directing restoration of registration subject to payment of due taxes, interest, penalty, and submission of pending returns within the stipulated period. The writ petition was accordingly disposed of with no costs.

Between Fine Lines:

This judgment reinforces the equitable approach of the Madras High Court in GST registration matters—emphasizing that procedural defaults like delayed return filing should not permanently deprive a business of registration if compliance is later achieved. It highlights the trade-friendly judicial view that revocation should be permitted upon rectification, safeguarding business continuity while ensuring revenue protection.

Summary of Referred Case:

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