Judgment
WP(C) NO. 9056 OF 2025 1 2025:KER:24342 “C.R.” IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS FRIDAY, THE 21ST DAY OF MARCH 2025 / 30TH PHALGUNA, 1946 WP(C) NO. 9056 OF 2025 PETITIONER :
AISHA PADMINI, AGED 58 YEARS D/O V. K. MADHAVAN PROPRITRIX, M/S. ENVISION SUPPORT SERVICES 37/992, SENJ PLAZA, LISIE JUNCTION, PULLEPADI ROAD, ERNAKULAM NORTH, ERNAKULAM ., PIN – 682 018.
BY ADV SANTHOSH P.ABRAHAM RESPONDENT(S):
1 THE SUPERINTENDENT OF CENTRAL TAX & CENTRAL EXCISE TAXPAYER SERVICE CIRCLE, ERNAKULAM RANGE 1, ERNAKULAM NORTH, GST BHAVAN, KALOOR, KOCHI, PIN – 682 017.
2 THE PRINCIPAL CHIEF COMMISSIONER OF CENTRAL TAX, CENTRAL EXCISE AND CUSTOMS THIRUVANANTHAPURAM ZONE C R BUILDING, I.S. PRESS ROAD, KOCHI, PIN – 682 018.
3 THE COMMISSIONER STATE GOODS AND SERVICE TAX DEPARTMENT, TAX TOWER, KARAMANA P.O. THIRUVANANTHAPURAM, PIN – 695 002.
4 CENTRE BOARD OF INDIRECT TAXES & CUSTOMS GST POLICY WING, NORTH BLOCK, NEW DELHI REPRESENTED BY THE PRINCIPAL COMMISSIONER (GST), PIN – 110 001.
BY ADV P.R SREEJITH DR.THUSHARA JAMES, SR. GP THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 21.03.2025, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
WP(C) NO. 9056 OF 2025 2 2025:KER:24342 ‘C.R.’ BECHU KURIAN THOMAS, J.
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W.P.(C) No.9056 of 2025 …................................................
Dated this the 21st day of March, 2025 JUDGMENT “Can an order of cancellation of registration as a taxpayer due to non-filing of returns for six months continuously, be set aside, if returns are filed for a few months, subsequent to the issuance of show cause notice? “ The said question arises for consideration in this writ petition.
2. Petitioner was a taxable person under the CGST/SGST Act. She was engaged in supplying security personnel to various institutions. Due to the failure to submit returns for six continuous months from August 2023 to January 2024, Ext.P1 show cause notice was issued on 12.03.2024, calling upon the petitioner to explain why her registration should not be suspended. Without filing a reply to the show cause notice, petitioner filed returns for two months i.e., for August 2023 and September 2023. However, the first respondent, by order dated 17.04.2024 cancelled the registration with effect from the said date itself. Petitioner challenges the cancellation contending that, due to the filing of returns for two months before the order of cancellation, there arose a break in continuity in the six month period and hence
WP(C) NO. 9056 OF 2025 3 2025:KER:24342 the registration could not have been cancelled.
3. I have heard Sri.Santhosh P. Abraham, the learned counsel for the petitioner as well as Sri.P.R.Sreejith, the learned Standing Counsel and Dr.Thushara James, the learned Senior Government Pleader.
4. Section 29 of the CGST Act deals with cancellation or suspension of registration. It states that the proper officer may, cancel the registration of a registered person if the circumstances mentioned in the provision are satisfied. Section 29(2)(c) of the GST Act, states that the registration may be cancelled even retrospectively when the person paying the tax has not furnished returns for such continuous tax period as may be prescribed. Prior to 01.10.2022, the provision stipulated that the failure to furnish returns ought to have been for a continuous period of six months; which has been substituted with words ‘as may be prescribed’. Though in Section 29(2)(c) of the Act, the word ‘continuous period of six months’ was deleted, the same was incorporated by an amendment in Rule 21(h) of the Central Goods and Service Tax Rules 2017 (for short the CGST Rules), which reads as follows :- 21.Registration to be cancelled in certain cases.- The registration granted to a person is liable to be cancelled, if the said person,- xxxxx xxxxx xxxxx (h) being a registered person required to file return under sub-section (1) of section 39 for each month or part thereof, has not furnished returns for a continuous period of six months;
WP(C) NO. 9056 OF 2025 4 2025:KER:24342 5. Thus, notwithstanding the amendment to Section 29(2)(c) of the CGST Act, the situation remains the same. If a person fails to file the return for a continuous period of six months, it gives a cause of action to the proper officer to cancel the registration.
6. Rule 22 of the CGST Rules refers to the procedure for cancellation of registration. Proviso to Sub clause (4) of the said provision is relevant for this case and is hence extracted as below :- 22.Cancellation of Registration.- xxxxx xxxxx xxxxx xxxxx xxxxx xxxxx (4) Where the reply furnished under sub-rule (2) or in response to the notice issued under sub-rule (2-A) of rule 21-A is found to be satisfactory, the proper officer shall drop the proceedings and pass an order in Form GST REG- 20:
[Provided that where the person instead of replying to the notice served under sub-rule (1) for contravention of the provisions contained in clause (b) or clause (c) of sub-section (2) of section 29, furnishes all the pending returns and makes full payment of the tax dues along with applicable interest and late fee, the proper officer shall drop the proceedings and pass an order in Form GST REG- 20.]
7. A perusal of the above extracted provision as well as that of Rule 21(h) and Section 29(2)(c) of the CGST Act makes it explicit that when there is a failure to file returns for a continuous period of six months it gives a cause of action for the proper officer to cancel the registration after issuing a show cause notice. However, once the show cause notice is issued, the taxpayer is given the liberty to avoid cancellation of registration by filing the returns for all six months along with the
WP(C) NO. 9056 OF 2025 5 2025:KER:24342 tax interest and late fee. A piecemeal filing of returns is not contemplated by the Rules, as is evident from the proviso to Rule 22(4) of CGST Rules. Unless the returns for all six months; along with tax interest and late fee, are submitted, the cause of action that arose due to non filing of returns for six months will not be wiped-off. In order to avoid the serious repercussion of cancellation of registration, it is an obligation for the taxpayer to file all the returns and pay the tax interest and late fee, after the show cause notice was issued.
8. In the instant case, show cause notice was issued on 12.03.2024, while the petitioner filed Ext.P2 return on 13.03.2024 i.e., after the issuance of show cause notice. Two weeks later, she filed returns for yet another month. Still, the requirement of the proviso to Rule 22(4) was not satisfied. The taxpayer had the liberty to avoid cancellation, by filing returns for all the six months. Once the cause of action arose by issuance of show cause notice, the end result can be avoided only by filing returns for all six months along with the tax interest and late fee.
9. The learned counsel for the petitioner referred to the decision of a learned single Judge of this Court in Phoenix Rubbers M/s. v. The Commercial Tax Officer and others [2020 KHC 533] wherein it was observed that the continuous default of six months in filing the returns must be fulfilled not only at the time of issuance of show cause notice, but even at the time of order cancelling the registration.
It was further observed that, if in the meantime, the return is filed, the continuous default will be interrupted and the registration cannot
WP(C) NO. 9056 OF 2025 6 2025:KER:24342 be cancelled. A reading of the aforesaid judgment, reveals that, though Rule 22 was extracted in the judgment, there was no reference or consideration of the implication of the proviso to Rule 22(4). In fact it is to be observed that the proviso to Rule 22(4) was not brought to the notice of the learned single Judge. Since the said statutory mandate was not considered by the learned single Judge, the judgment in M/s.Phoenix Rubbers case (supra) has to be held as per incuriam.
10. In the instant case, since petitioner had filed Ext.P2 return on 13.03.2024, after the issuance of the show cause notice, that too, initially for one month and two weeks later, for yet another month, the requirement of the proviso to Rule 22(4) has not been satisfied.
The default of non filing of returns for a continuous period of six months remained as on the date of show cause notice, and petitioner failed to rectify the mistake by filing all the returns along with the tax interest and late fee. Thus, the order cancelling the registration is legally justified and the same warrants no interference.
Hence, I do not find any merit in this writ petition, and it is dismissed.
sd/- BECHU KURIAN THOMAS JUDGE AMV/22/03/2025
WP(C) NO. 9056 OF 2025 7 2025:KER:24342 APPENDIX OF WP(C) 9056/2025 PETITIONER EXHIBITS EXHIBIT P1 TRUE COPY OF THE SHOW CAUSE NOTICE FOR CANCELLATION OF REGISTRATION IN FORM GST REG -17/31 NO ZA3203240128810 DATED 12-03- 2024 ISSUED BY THE 1ST RESPONDENT EXHIBIT P2 TRUE COPY OF THE FORM GSTR 3B FOR AUGUST 2023-24 DATED 13-03-2024 EXHIBIT P3 TRUE COPY OF THE FORM GSTR 3B FOR SEPTEMBER 2023-24 DATED 27-03-2024 EXHIBIT P4 TRUE
COPY
OF
FORM
GST
REG-19 NO.ZA3204240021043D ORDER FOR CANCELLATION OF REGISTRATION DATED 17-04-2024 EXHIBIT P5 TRUE COPY OF THE STATEMENT SHOWING THE RETURN FILING DATE FOR THE MONTH OF APRIL 2023 TO MARCH 2024 EXHIBIT P6 TRUE COPY OF THE FORM GSTR-3B FOR MARCH 2023-24 DATED 14-08-2024 EXHIBIT P7 TRUE
COPY
OF
THE
APPEAL
ORDER A.NO.246/GST/CHN/ADC-JC/2024-25
DATED 17-02-2025 ISSUED BY THE JOINT COMMISSIONER (APPEALS), CENTRAL TAX AND CENTRAL EXCISE, KOCHI