Safiya Malik

The High Court of Kerala Single Bench of Justice Ziyad Rahman A.A. held that a GST registration that was voluntarily cancelled cannot be revived merely to secure input tax credit, even though Section 16(6) of the CGST Act now permits credit to be availed when a cancellation is lawfully reversed. The dispute concerned a former distributor who sought restoration of registration solely to utilise credit reflected in the ledger after the provision came into force. The Court clarified that the statutory benefit applies only where cancellation is set aside through authorized mechanisms such as proceedings under Section 30 or appellate orders, and cannot generate a new ground to reopen concluded cancellations. The petition was accordingly dismissed.

The writ petition concerned a taxpayer who had been engaged in the distribution of SIM cards and recharge coupons and was registered under the CGST-SGST Act, 2017. The petitioner had closed the business and applied for cancellation of registration, which took effect from 30.11.2018. At the time of cancellation, there was no outstanding tax liability. Later, on 24.12.2022, the tax authority issued an intimation under Section 73(5), proposing a demand of ₹1,52,060 along with applicable interest, alleging that the tax paid in GSTR-3B was lower than that declared in GSTR-1. The petitioner submitted a reply, but proceedings continued, culminating in an order dated 30.04.2024 confirming the demand. This order was not appealed.

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Subsequently, with effect from 01.10.2024, Section 16(6) was introduced into the CGST Act through the Finance Act, 2024. The provision enabled a taxpayer to claim input tax credit where registration was cancelled and later revoked by an authority or court, subject to conditions stated in the statute. Contending that the provision entitled the petitioner to avail remaining input tax credit, the petitioner approached the Court seeking restoration of GST registration so that returns could be filed and credit could be claimed in terms of Section 16(6).

The respondents argued that the petitioner had voluntarily closed the business and that restoration could not be sought solely to claim benefits introduced after the assessment order became final. The case thus centred on whether the statutory amendment created a fresh cause for revival of registration in the absence of any earlier challenge to cancellation or to the demand order.

The Court recorded that “the petitioner had closed down the business, and a conscious decision was taken to cancel the registration, which fact is not disputed.” It observed that the restoration sought was solely for availing the benefit of Section 16(6), noting that the provision was introduced “after the issuance of Ext.P7 order under Section 73 of the CGST Act.”

The Court stated that Section 16(6) applies only “in respect of the taxpayers, whose registration was cancelled and later such cancellation was revoked by the order passed by the authorities or by this Court.” It further recorded that the provision does not create “a fresh cause of action in respect of the taxpayers, whose registration is cancelled, for getting the restoration of the registration, only for the purpose of availing the benefit of Section 16(6).”

The judgment noted that “the said benefit is applicable only in respect of the circumstances where such revocation is permitted as per the statutory stipulations contained in the CGST Act and the Rules framed thereunder, when the petitioner had invoked appropriate remedies available to him, highlighting the illegality in the same.” The Court observed that in the present case, “the petitioner never invoked such remedies to seek such restoration.”

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The Court stated that as of 30.04.2024, when the demand order was passed, “Section 16(6) was not in force, and therefore the benefit, which was not available to the taxpayer as of the date of Ext.P7 order, cannot be availed by the petitioner, merely because, on a subsequent date, a provision was incorporated.” It further recorded that “Exts.P4 and P7 have become final, since no appeal has been filed against the same.”

On this basis, the Court concluded that the relief sought was “only for the purpose of availing the benefit of Section 16(6) of the CGST Act, and not in relation to any circumstances referred to in the Act or under the circumstances contemplated therein.” Accordingly, the Court observed that such relief “cannot be granted.”

The Court stated: “I am of the view that the reliefs sought by the petitioner to restore the registration, which is only for the purpose of availing the benefit of Section 16(6) of the CGST Act, and not in relation to any circumstances referred to in the Act or under the circumstances contemplated therein, cannot be granted. Accordingly, this writ petition is dismissed.”

 Advocates Representing the Parties

For the Petitioner: Shri. Padmanathan K.V., Advocate; Sri. R. Sreejith, Advocate

For the Respondents: Smt. Reshmitha R. Chandran, Senior Government Pleader; Shri. P.R. Sreejith, Senior Standing Counsel

Case Title: Saleena Shahul Hameed v. State Tax Officer & Others
Neutral Citation: 2025:KER:82612
Case Number: W.P.(C) No. 40341 of 2025
Bench: Justice Ziyad Rahman A.A.