2025 (9) TMI 390 - HC - GST

GST registration restored where cancellation was procedural technicality and appeal period expired; relief granted under Article 226

The HC quashed an order canceling the petitioner's GST registration and allowed the writ petition, holding the statutory period for appeal (including the ... Cancellation of GST registration of petitioner - time limitation - HELD THAT:- On perusal of the materials on record, it appears to this Court that, the time to file statutory appeal including the grace period as provided under the statute stands expired. The impugned order cancelling of registration of the petitioner shows that there were some procedural non-compliance on the part of the petitioner leading to cancellation of the registration. These procedural non-compliance are curable. The law is well settled that substantive justice and right shall not suffer for procedural non-compliance of some formalities. This Court is of the considered opinion that, the cancellation of GST registration of the petitioner on the procedural ground would not enure any benefit either to the revenue authority or to the petitioner. On the contrary, if the GST certificate stands restored and the petitioner is allowed to carry on its business, the State can earn revenue to the till of the public exchequer. Existence of alternative remedy is not an absolute bar to entertain a writ petition by this Constitutional Court in exercise of its jurisdiction under Article 226 of the Constitution of India but is a self-imposed restraint. Alternative remedy does not make a writ petition to be not maintainable but the same may not be entertained by a writ court depending upon the facts and circumstances of the case. Each case differs from other on facts. There is no fixed and straight jacket formula and the same depends on the facts of each case. While exercising power under Article 226 of the Constitution of India, this Constitutional Court also exercises its equitable jurisdiction. In the facts and circumstances of the instant case, the statutory period for preferring an appeal from the impugned order, including the grace period as provided under the statute has expired. Due to the cancellation of the GST registration, the entire business of the petitioner has been stopped. The impugned order shows that due to non-compliance of some procedural requirements, the registration was cancelled. Considering the facts and circumstances in this case, this writ petition is entertained. The impugned order of cancellation of registration dated March 26, 2025 annexure p-3 at page 17 stands set aside and quashed - petition allowed. ISSUES PRESENTED AND CONSIDERED 1. Whether cancellation of GST registration on grounds of non-filing of returns and procedural non-compliance is amenable to writ jurisdiction under Article 226 despite expiration of the statutory period of appeal, including grace period. 2. Whether procedural non-compliance leading to cancellation of registration is curable and whether restoration of registration can be directed subject to compliance with statutory obligations (filing returns, payment of tax, interest, fine and penalty). 3. Whether the existence of an alternative remedy (statutory appeal) is an absolute bar to entertaining a writ petition under Article 226 in cases of cancellation of GST registration. 4. Whether the relief of conditional restoration (opening portal, time-limited compliance) is appropriate and within the equitable jurisdiction of the Court in matters concerning revenue and registration. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Writ jurisdiction despite expiration of statutory appeal period Legal framework: The Constitution vests power in this Court under Article 226 to issue writs for enforcement of fundamental rights and for any other purpose. The statute provides a specific appellate remedy under the GST law (Section 107 of the 2017 Act) with prescribed limitation and a statutory grace period. Precedent treatment: The Court relied on prior decisions of coordinate and Division Benches that entertained writ relief to set aside cancellations of GST registration on procedural grounds and granted opportunities for compliance (as applied in related decisions quoted by the parties). Interpretation and reasoning: The Court held that expiration of the period to prefer the statutory appeal, including the grace period, does not per se oust writ jurisdiction. The Court examined the nature of the impugned order - cancellation for procedural non-compliance - and balanced the public interest in revenue collection against the individual's right to livelihood. The Court found that the cancellation, being grounded in curable procedural defaults, justified exercise of constitutional jurisdiction to secure substantive justice. Ratio vs. Obiter: Ratio - Where cancellation is for procedural non-compliance that is curable, Article 226 may be invoked even though the statutory appeal period (and grace period) has expired. Obiter - General observations on the non-absolute nature of alternative remedies and the equitable discretion of the writ court. Conclusions: The Court concluded that writ jurisdiction was properly exercised to entertain the petition despite expiry of the appeal period given the curable nature of the defaults and the consequences of non-restoration on livelihood and revenue. Issue 2 - Curability of procedural non-compliance and conditional restoration Legal framework: The GST statutory scheme prescribes consequences for non-compliance (including cancellation) and mandates filing of final/form returns (e.g., FORM GSTR-10) and payment of tax, interest, penalties; administrative authorities have powers to cancel and to restore registration subject to law. Precedent treatment: The Court expressly relied on precedents where courts set aside cancellations and permitted restoration on condition of compliance with outstanding statutory obligations (returns, taxes, interest, penalties and fines), treating procedural lapses as remediable. Interpretation and reasoning: The Court characterized the impugned cancellation as resulting from 'procedural non-compliance' (failure to file returns) rather than fraudulent or substantive evasion. Emphasizing that substantive justice should not be defeated by formal irregularities, the Court held that restoration can be made conditional upon the petitioner filing all returns for the default period and making requisite payments within a stipulated timeframe. The Court balanced revenue protection by requiring payment and enabling the State to earn exchequer benefits if the business resumes. Ratio vs. Obiter: Ratio - Procedural non-compliance that led to cancellation is curable; the Court can quash such cancellation and order restoration contingent upon full compliance (returns and payments) within a specified period. Obiter - Policy considerations as to revenue benefit and livelihood implications. Conclusions: The Court set aside the cancellation and ordered conditional restoration, directing the filing of returns and payment of tax, interest, fine and penalty within four weeks; failure would result in automatic dismissal of the writ without further reference. Issue 3 - Effect of alternative remedy (statutory appeal) on maintainability of writ petition Legal framework: Doctrine that availability of an alternative statutory remedy is a self-imposed restraint on exercise of writ jurisdiction; not an absolute bar. Precedent treatment: The Court cited authorities and prior coordinate decisions recognizing that alternative remedies may weigh against exercise of Article 226 powers but do not render a writ petition inherently non-maintainable; each case is fact-sensitive. Interpretation and reasoning: The Court reiterated that existence of an alternative remedy under Section 107 does not automatically preclude relief under Article 226, particularly where facts show curable procedural defaults, disruption of livelihood, and an expired statutory appeal period. The Court emphasized equitable jurisdiction and fact-specific assessment rather than a rigid rule. Ratio vs. Obiter: Ratio - Alternative remedy is not an absolute bar; the writ court may exercise jurisdiction where appropriate on facts, particularly when the appeal period has lapsed and relief is necessary to secure substantial justice. Obiter - Remarks on lack of a 'straight jacket formula' and the discretionary nature of the court's approach. Conclusions: The Court exercised discretion to entertain the writ petition notwithstanding the availability of statutory appeal, given the factual matrix and the curable nature of defaults. Issue 4 - Appropriateness and limits of equitable directions (portal opening, time-limited compliance) Legal framework: Writ courts possess equitable powers to mould relief to secure justice; administrative authorities may be directed to take administrative steps consistent with law to implement judicial directions. Precedent treatment: The Court followed precedents that granted time-limited, conditional relief and directed administrative facilitation (e.g., opening of portals) to enable compliance and restoration of registration. Interpretation and reasoning: The Court found it appropriate to direct the concerned authorities to open the portal to enable filing of returns and payments, thereby operationalizing the conditional restoration. The Court imposed a clear timeline (four weeks) and provided for automatic dismissal in event of non-compliance, thus preserving finality and administrative convenience while safeguarding substantive rights and revenue interest. Ratio vs. Obiter: Ratio - The writ court may issue pragmatic, time-bound, and conditional directions (including administrative facilitation) to implement conditional restoration while protecting the State's revenue interest. Obiter - Practical policy observations on revenue generation from restored commerce. Conclusions: The Court directed administrative steps (portal opening) and imposed a four-week compliance period; compliance would lead to immediate restoration with consequential effects, while default would result in automatic dismissal of the writ. Cross-references and operative conclusions 1. Issues 1-3 are interlinked: the curable nature of procedural defaults (Issue 2) and the expired appeal period support the exercise of Article 226 despite an alternative remedy (Issue 3), thereby justifying jurisdiction (Issue 1). 2. Issue 4 operationalizes the relief by prescribing remedial steps and timelines, ensuring that restoration is conditional, time-bound, and protective of revenue interests. 3. Operative relief: Cancellation quashed; petitioner required to file all default returns and pay tax, interest, fine and penalty within four weeks; upon compliance, registration to be restored with consequential effects; failure results in automatic dismissal.