Telangana High Court permits manual revocation of cancelled GST registration where portal blocks online filing
Overview
The Telangana High Court, in Diya Distributors vs Deputy State Tax Officer & Others, has once again intervened to protect business continuity where a GST registration was cancelled for procedural lapses and the GST portal did not permit online revocation due to expiry of the prescribed time limit.
Recognising both the technical barrier on the GST portal and the commercial impact of retrospective cancellation, the Court directed the authorities to accept a manual (physical) application for revocation of cancellation and to decide it on merits in accordance with law.
This decision reinforces the judicial trend of not allowing technicalities and portal constraints to permanently deprive genuine assessees of their GST registration, particularly where they express readiness to regularise all pending compliances.
Factual Matrix
Cancellation of registration
The assessee, Diya Distributors, held GST registration bearing GSTIN No.36DHHPA7385F1Z8. The registration was cancelled through an order in Form GST REG-19 dated 23.03.2024, on the allegation that the assessee was filing NIL returns.
Post-cancellation, the assessee invoked the writ jurisdiction of the Telangana High Court seeking relief against the cancellation and praying for an opportunity to apply for revocation.
Role of consultant and communication failure
As placed before the Court:
- Diya Distributors had entrusted all GST-related work, including filing of returns and handling departmental notices, to a tax professional.
- The consultant allegedly did not:
- Alert the assessee about any show cause notice,
- Inform about initiation of cancellation proceedings, or
- Convey the passing of the cancellation order.
The assessee claimed that the cancellation came to light only when its purchasing dealers began facing issues with Input Tax Credit (ITC).
Impact on purchasing dealers
The assessee asserted that:
- Due to retrospective cancellation of its GST registration:
- Its buyers were being denied ITC on supplies already made,
- Departmental authorities were raising demands on such buyers to repay GST,
- As a consequence, the purchasing dealers were turning to the assessee to either compensate or refund GST collected earlier.
This commercial fallout prompted the assessee to immediately seek revival of its registration and to regularise any pending dues.
Portal limitation and request for manual filing
When Diya Distributors attempted to apply for revocation of cancellation through the GST portal, the system blocked the filing on the ground that the statutory time limit had been crossed.
Accordingly, the assessee sought a direction from the Telangana High Court to:
- Permit submission of a physical/manual application for revocation, and
- Require the competent authority to examine such application in accordance with law, instead of rejecting the assessee at the threshold due to portal constraints.
Core Legal Issue
The central question before the Court was:
Whether an assessee whose GST registration stands cancelled can be allowed to submit a manual application for revocation after expiry of the prescribed time limit, in a situation where the GST portal does not allow electronic filing?
This issue is becoming increasingly common where technical restrictions on the GST portal collide with equitable considerations and the need to protect ongoing business activity.
Submissions Before the Court
Contentions of the assessee
The petitioner-assessee, Diya Distributors, advanced the following points:
- Entrustment to consultant
All GST compliances, including handling notices and responses, were handed over to a tax consultant.