Cancellation of GST registration for non-filing of returns can be reversed if the taxpayer rectifies the default, even if the statutory time limit for revocation has expired.
The court ruled that if the assessee demonstrates willingness to comply, the authority should consider dropping the cancellation proceedings and restoring the registration.
Issue
Whether an assessee, whose GST registration was cancelled for non-filing of returns and who missed the statutory deadline for applying for revocation, can still seek restoration of their registration by rectifying the default (filing pending returns and paying all dues).
Facts
The petitioner’s GST registration was cancelled because she had not filed returns for a continuous period of six months. A show cause notice (SCN) was served, but the petitioner, being unfamiliar with online procedures, failed to submit a timely reply. As a result, an order was uploaded to the portal, cancelling her registration. When she became aware of the cancellation, the time limit for both replying to the SCN and applying for revocation had already elapsed. The petitioner, however, proceeded to file all her pending returns and paid the outstanding tax, interest, and late fees. She then sought a legal remedy to have her registration restored.
Decision
The court, taking a pragmatic and lenient approach, ruled in favor of the petitioner. It held that if the petitioner approaches the concerned authority, providing all pending returns and making full payment of tax dues, interest, and late fees, the authority may consider dropping the proceedings for cancellation and pass an appropriate order in the prescribed Form GST REG-20. The petition was disposed of with a direction for the petitioner to approach the concerned authority within two months to seek restoration of her GST registration.
Key Takeaways
- Curable Default: The court views the non-filing of returns as a curable procedural default, rather than an irreversible offense, especially when the assessee is willing to rectify the mistake.
- Focus on Compliance and Revenue: The ruling prioritizes the state’s interest in receiving tax revenue over a strict adherence to procedural timelines. By allowing the assessee to restore her registration and continue her business, the state can secure future tax collections.
- Discretion of the Authority: The decision empowers the GST authority to exercise its discretion under Rule 22 of the CGST Rules, 2017, to drop cancellation proceedings. This rule allows a proper officer to issue an order in Form GST REG-20 if they are satisfied with the taxpayer’s reply to the show cause notice. The court’s order essentially directs the authority to be receptive to a late but complete compliance effort.
- Judicial Intervention: This case demonstrates that even when statutory time limits have expired, courts can intervene to provide a remedy, particularly in cases where the assessee’s non-compliance was not a deliberate act of tax evasion but rather a result of a lack of familiarity with online procedures. This approach upholds the principle of justice over technicality.
- Pro-Taxpayer Relief: The outcome is highly beneficial to the assessee, as it provides a pathway to revive a business that was shut down due to an administrative oversight. It serves as an important precedent for similar cases of genuine but late compliance.
HIGH COURT OF GAUHATI
Silpi Das
v.
Sanjay Kumar Medhi, J.
WP(C) No. 5102 OF 2025
SEPTEMBER 3, 2025
R.S. Mishra and A.K. Gupta, Advs. for the Petitioner. J. P. More, Ms. V. Thakuria, Learned counsels, S. Chetia, Learned Senior Standing Counsel and P. S. Bhattacharya, Learned CGC for the Respondent.
ORDER
1. Heard Shri R. S. Mishra, learned counsel for the petitioner. Also heard Shri J. P. More, learned counsel appearing on instruction of Shri S. Chetia, learned Senior Standing Counsel, CGST for the respondents and Ms. V. Thakuria, learned counsel appearing on behalf of Shri P. S. Bhattacharya, learned CGC.
2. It is the case of the petitioner that she has been carrying out her business under the name & style, “Silpi Das”. She is the sole proprietor and is an assessee registered under the Central Goods and Services Tax (CGST) Act, 2017/Assam Goods and Services Tax (AGST) Act, 2017 bearing registration No. 18BMCPD4905N1ZY. Because of non-filing of GST returns for a continuous period of six months, the petitioner was served with a show cause notice bearing reference No. ZA1801230189989 dated 15.01.2023 asking her to furnish reply to the aforesaid notice within a period of 30 (thirty) days from the date of service of notice and it was mentioned in the aforesaid show cause notice that if the petitioner fails to furnish a reply within the stipulated date or fails to appear for personal hearing on the appointed date and time, the case will be decided ex-parte on the basis of the available records and on merits. Thereafter, the impugned order dated 02.03.2023 was passed by the Superintendent, Naharkatia-1, Naharkatia Range, whereby the petitioner’s GST registration has been cancelled without assigning any reason.
3. The petitioner contends that she was not so much conversant with the online procedure. Therefore, she could not submit any reply to the said show cause notice. It is further contended that when the petitioner came across the said notice, the time for filing reply was already over and order had also been uploaded in the portal.
4. The petitioner further contends that he updated all his pending returns up to the month of March, 2023 as allowed by the GST portal and while updating her returns, the petitioner has also discharged all her GST dues along with her late fees and interest.
5. Thereafter, the petitioner tried to file the necessary application seeking revocation of GST cancellation, however, the same could not be filed as the time limit prescribed for filing of revocation application was elapsed and a message was displayed in the screen “timeline of 270 days from the date of cancellation order provided to taxpayer to file application for revocation of cancellation is expired .”
6. Being aggrieved, the petitioner has approached this Court by filing the present writ petition.
7. Mr. Mishra, learned counsel for the petitioner has submitted that the petitioner is ready and willing to comply with all the formalities required as per proviso to sub-rule (4) of Rule 22 of the CGST Rules, 2017.
8. As per Section 29(2)(c) of the Act, an officer, duly empowered, may cancel the GST registration of a person from such date, including any retrospective date, as he deems fit, where any registered person, has not furnished returns for a continuous period of 6 (six) months. Rule 22 of the CGST Rules, 2017 has laid down the procedure for cancellation of the registration.
9. Rule 22 of the CGST Rules, 2017 being the bone of contention, is extracted herein below:-
Rule 22 : Cancellation of Registration
(1) Where the proper officer has reasons to believe that the registration of a person is liable to be cancelled under Section 29, he shall issue a notice to such person in FORM GST REG-17, requiring him to show cause, within a period of seven working days from the date of the service of such notice, as to why his registration shall not be cancelled.
(2) The reply to the show cause notice issued under sub-rule [1] shall be furnished in FORM REG-18 within the period specified in the said sub-rule.
(3) Where a person who has submitted an application for cancellation of his registration is no longer liable to be registered or his registration is liable to be cancelled, the proper officer shall issue an order in FORM GST REG-19, within a period of thirty days from the date of application submitted under Rule 20 or, as the case may be, the date of the reply to the show cause issued under sub-rule
(1), (or under sub-rule (2A) of Rule 21A) cancel the registration, with effect from a date to be determined by him and notify the taxable person, directing him to pay arrears of any tax, interest or penalty including the amount liable to be paid under sub-section (5) of Section 29.
4) Where the reply furnished under sub-rule (2) (or in response to the notice issued under sub-rule (2A) of Rule 21A) is found to be satisfactory, the proper officer shall drop the proceedings and pass an order in FORM GST REG-20 : Provided that where the person instead of replying to the notice served under sub rule (1) for contravention of the provisions contained in Clause (b) or Clause (c) of sub-section (2) of section 29, furnishes all the pending returns and makes full payment of the tax dues along with applicable interest and late fee, the proper officer shall drop the proceedings and pass an order in FORM GST REG-20.
(5) The provisions of sub-rule (3) shall, mutatis mutandis, apply to the legal heirs of a deceased proprietor, as if the application had been submitted by the proprietor himself.
10. 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.
11. The learned counsel for the parties have also referred to an Order dated 11.10.2023 passed in a writ petition being WP(C) No.6366/2023 Sanjoy Nath v. Union of India 102 GST 176/82 GSTL 49 (Gauhati) wherein the petitioner therein was similarly situated like the present petitioner.
12. Having regard to the fact that the GST registration of the petitioner has been cancelled under Section 29(2)(c) of the Act, for the reason that the petitioner did not submit returns for a period of 6 (six) months and more and the provisions contained in the proviso to sub-rule (4) of Rule 22 of the CGST Rules, 2017 and cancellation of registration entails serious civil consequences, 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 make full payment of the tax dues, along with applicable interest and late fee, the officer duly empowered, may consider to drop the proceedings and pass an appropriate order in the prescribed Form.
13. In such view of the matter, this writ petition is disposed of by providing that the petitioner shall approach the concerned authority within a period of 2 (two) months from today seeking restoration of her GST registration. 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 his GST registration in accordance with law and shall take necessary steps for restoration of GST registration of the petitioner as expeditiously as possible.
14. 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. The petitioner herein would also be liable to make payment of arrears i.e. tax, penalty, interest and late fees.
15. This Court also clarifies that the present order has been passed in the interest of justice irrespective of the fact that the order of rejection of the appeal has not been put to specific challenge.
16. The writ petition accordingly stands disposed of. No cost.