GST Registration Cancellation Doesn’t Wipe Out Tax Liability

Case Details: Manikanta Electronics Services Center vs. State of Telangana, Department of Commercial Tax [2026] 183 taxmann.com 314 (Telangana)

Judiciary and Counsel Details

Aparesh Kumar Singh, CJ. & G.M. Mohiuddin, J.
Kailash Nath P S S, Learned counsel for the Petitioner.
Swaroop Oorilla, Learned Special Govt. Pleader for the Respondent.

Facts of the Case

The petitioner filed a writ challenging the actions of the Department of Commercial Tax. It had voluntarily applied for cancellation of its GST registration, indicating zero tax liability. The jurisdictional officer under CGST issued a show cause notice (SCN) alleging that it had failed to declare the correct input and output taxes in its returns and had not filed any reply to the SCN. The Assessing Authority proceeded to impose tax and penalty. It also filed an application for rectification under Section 161 of the CGST Act, which was rejected on the ground that it was seeking re-examination of the entire subject matter. The matter was accordingly placed before the High Court.

High Court Held

The High Court held that cancellation of GST registration does not absolve a taxpayer of any existing liability. The Court observed that the Assessing Authority was correct in proceeding to impose tax and penalty where it had failed to respond to the SCN. It was further held that the rejection of the rectification application under Section 161 was valid, as it sought re-examination beyond the statutory scope. The Court relied on the provisions of Section 29, read with Section 161 of the CGST Act, and Rule 142(2)/142(3) of the CGST Act, concluding that the impugned order did not suffer from any infirmity warranting interference.