GST Registration Cancelled For Non-Filing of Returns Can Be Restored After Compliance: Gauhati High Court

The Gauhati High Court has held that where GST registration is cancelled for non-filing of returns, and the taxpayer furnishes all pending returns and clears tax dues along with applicable interest and late fee, the proper officer may consider dropping the cancellation proceedings in terms of the proviso to Rule 22(4) of the CGST Rules.

A bench of Justice Sanjay Kumar Medhi observed that cancellation of GST registration entails serious civil consequences, and therefore, if the taxpayer complies with the statutory requirements, the authorities should consider restoration of registration in accordance with law.

The court observed, “It is discernible from a reading of the proviso to sub-rule (4) of Rule 22 of the Rules of 2017 that if a person, who has been served with a show cause notice under Section 29(2)(c) of the Act, is ready and willing to furnish all the pending returns and to make full payment of the tax itself along with applicable interest and late fee, the officer, duly empowered, can drop the proceedings and pass an order in the prescribed Form i.e. Form GST REG-20.”

The petitioner, a sole proprietor running Poly Enterprise, had her GST registration cancelled by order dated November 11, 2024 due to non-filing of returns for a continuous period of six months.

It was contended that due to miscommunication with her tax consultant, she was not aware of the show cause notice and could not submit a reply.

Subsequently, she furnished all pending returns up to November 2024 and discharged the tax liability along with interest and late fees. However, she could not file an application for revocation as the statutory timeline had expired, with the GST portal reflecting that the period of 270 days from the date of the cancellation order had lapsed.

Taking note of the statutory scheme under Section 29(2)(c) of the CGST Act and Rule 22 of the CGST Rules and that cancellation of registration entails serious civil consequences, the Court held that this Court is of the considered view that in the event the petitioner approaches the officer duly empowered by furnishing all the pending returns and making full payment of the tax dues along with applicable interest and late fee, the officer may consider dropping the proceedings and pass an appropriate order in the prescribed form.

Accordingly, the court permitted the petitioner to approach the concerned authority within two months seeking restoration of GST registration.

The Court directed, “If the petitioner submits such an application and complies with all the requirements as provided in the proviso to Rule 22 (4) of the Rules, the concerned authority shall consider the application of the petitioner for restoration of her GST registration in accordance with law and shall take necessary steps for restoration of GST registration of the petitioner as expeditiously as possible.”

The Court further clarified, “It is needless to say that the period as stipulated under Section 73 (10) of the Central GST Act/State GST Act shall be computed from the date of the instant order, except for the financial year 2024-25, which shall be as per Section 44 of the Central GST Act/State GST Act.”

For Petitioner: Advocate R.S. Mishra

For Respondents: S.C. Keyal, SC, CGST