The Madurai Bench of the Madras High Court has granted conditional relief to a business whose GST registration was cancelled for irregular filing of monthly returns, directing that restoration would depend on filing outstanding returns, paying applicable dues and complying with restrictions on the use of input tax credit (ITC).
The bench of Justice Senthilkumar Ramamoorthy followed the earlier ruling in Suguna Cutpiece v. Appellate Deputy Commissioner (ST)(GST), observing that the judgment had been applied in several subsequent cases and that consistency warranted adopting the same approach. The order was passed on October 16, 2026.
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The petitioner/assessee challenged a cancellation order dated February 27, 2026, issued by the Commercial Tax Officer in Form GST REG-19.
The cancellation followed a show cause notice dated December 8, 2025, which stated that the business had not filed its monthly GST returns regularly.
Appearing for the business, advocate S.M. Arun Kumaar submitted that cancellation of the registration was causing immense hardship and sought its revocation. He relied on the relief granted in Suguna Cutpiece.
Special Government Pleader R. Parthiban, appearing for the department, maintained that the cancellation arose from irregular return filing. He also submitted that the relief in Suguna Cutpiece was conditional and that the business should be required to satisfy all the conditions prescribed in that ruling.
The central issue before the Court was whether GST registration cancelled for non-filing of returns could be restored subject to compliance with the conditions laid down in the earlier judgment.
The Court adopted that framework and expressly made restoration conditional upon fulfilment of the prescribed requirements.
Under the directions reproduced in the order, the business must file returns for the period preceding cancellation and pay the corresponding tax dues, interest and applicable late-filing fee within 45 days from receipt of a copy of the order.
It must also pay GST and file returns for the period subsequent to cancellation, declaring the correct value of supplies. Accordingly, the relief requires compliance for both the period before cancellation and the subsequent period.
A significant condition concerns the manner in which the pending liabilities are to be discharged.
The directions prohibit payment or adjustment of the stipulated tax, interest, fine, fee and other amounts against ITC lying unutilised or unclaimed with the business.
Further, any unutilised ITC must remain unused until an appropriate or competent departmental officer scrutinises and approves it. Only the approved credit may thereafter be used to discharge future tax liabilities under the applicable Act and Rules.
The adopted conditions also require scrutiny and approval by the department or another competent authority before any ITC earned is permitted to be utilised. These restrictions form part of the conditional restoration granted in this case.
The Court also adopted directions requiring the department to take suitable steps by instructing GST Network, New Delhi, to make the necessary changes to the GST portal so that the business can file returns and pay the applicable tax, penalty and fine.
The directions prescribe 30 days from receipt of a copy of the order for the departmental exercise.
Upon payment of tax and penalty and uploading of returns, the registration is to stand revived forthwith, subject to fulfilment of the conditions adopted by the Court.
The Court disposed of the writ petition on the same terms as Suguna Cutpiece, without imposing costs.
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