GST Registration Restored on Payment of Dues; Financial Distress Accepted

Issue

Whether the High Court can direct the restoration of a GST registration cancelled due to non-filing of returns (Section 29(2)(c)), even after the statutory appeal was rejected as time-barred, provided the taxpayer clears all outstanding dues.

Facts

Petitioner: A company running amusement parks and resorts.
The Default: Due to financial distress, the company failed to file periodic returns under Section 39 after March 2024.
The Action: The Proper Officer issued a Show Cause Notice (SCN) and subsequently cancelled the registration ex-parte under Section 29(2)(c).
Appellate Failure: The appeal filed under Section 107 was rejected by the Appellate Authority on the ground that it was time-barred (beyond the condonable period).
Petitioner’s Compliance: Before the High Court, the petitioner undertook to file all pending returns and pay the necessary tax, interest, and late fees. The State counsel confirmed that the petitioner had indeed cleared the dues and filed the returns.

Decision

Substantial Justice: The High Court observed that the primary objective of the GST regime is to facilitate business while ensuring tax compliance. Since the petitioner had rectified the default by paying all taxes, interest, and late fees, continuing the cancellation would be harsh and counter-productive to revenue collection.
Restoration: The Court quashed the cancellation order and the appellate order rejecting the appeal.
Ruling: The GST registration was directed to be restored forthwith, allowing the petitioner to resume business operations.

Key Takeaways

Writ Remedy for Time-Barred Appeals: If your GST appeal against cancellation is rejected solely because you missed the deadline (3+1 months), High Courts are generally inclined to restore registration under Article 226, provided you prove your bona fides by paying all outstanding dues before the hearing.

Financial Distress is a Valid Plea: Courts often view financial hardship sympathetically in cancellation cases, distinguishing between “willful defaulters” and those struggling with liquidity, as long as the ultimate tax liability is discharged.

HIGH COURT OF GUJARAT

Setu Joy (P.) Ltd.

State of Gujarat

A.S. Supehia and Pranav Trivedi, JJ.

R/SPECIAL CIVIL APPLICATION NO. 10970 of 2025

NOVEMBER 14, 2025

Apurva N. Mehta for the Petitioner. Ms. Nimisha J. Parekh, Assistant Govt. Pleader for the Respondent.

JUDGMENT

Pranav Trivedi, J.- Heard learned advocate Mr.Apurva N. Mehta for the petitioner and learned Assistant Government Pleader Ms.Nimisha J. Parekh for the respondents-State.

2. Having regard to the controversy involved in this petition, with the consent of the learned advocates for the respective parties, the matter is taken up for hearing.

3. Rule returnable forthwith. Learned Assistant Government Pleader Ms.Parekh waives service of notice of rule on behalf of respondents-State.

4. By this petition, under Article 226 of the Constitution of India, the petitioner has prayed to quash and set aside the show cause notice for cancellation of the registration dated 09.09.2024 under the provisions of Gujarat Goods & Service Tax Act, 2017, (hereinafter referred to as “the Act” for short) as well as the order of cancellation of Registration dated 27.09.2024 passed by the State Tax Officer, Ghatak-75, Bhavnagar (hereinafter referred to as “the respondent” for short) as well as the order in Appeal dated 06.05.2025 passed under Section 107 of the Act by the Deputy State Tax Commissioner, Appeals-9, Bhavnagar (hereinafter referred to as “the Appellate Authority” for short).

5. The brief facts of the case are that the petitioner is a Pvt. Ltd. Company engaged in the business of establishing and running of amusement parks, cinemas, water parks, resorts etc. The petitioner obtained registration under the provisions of the Act on 01.07.2017.

5.1. It is the case of the petitioner that petitioner Company had filed all the periodic self – assessment returns under the provisions of the Act from 01.07.2017 till 31.03.2024 and discharged the liability as per such returns. However, w.e.f. 01.04.2024, periodic returns under the provisions of Section 39 of the Act could not be filed by the petitioner – Company due to some financial difficulties.

5.2. In view of the non-filing of the periodic returns, the respondent issued a show cause notice on 09.09.2024 calling upon to show cause as to why the registration should not be cancelled as per provisions of Section 29 (2) (c) of the Act. The petitioner was directed to respond to the show cause notice within a period 7 days and thereafter, personal hearing was fixed on 18.09.2024. The petitioner failed to appear for personal hearing on the appointed date, which led to an ex parte order being passed, cancelling the Registration of the petitionerCompany. The reason for cancellation was non-furnishing of the periodic returns and non-payment of tax due to non filing of such returns.

5.3. It is the case of the petitioner that as soon as the petitioner came to know about the order of cancellation, an appeal under the provisions of Section 107 of the Act was preferred on 11.04.2025 before the Appellate Authority by submitting Form GST APL – 01. The pre- deposit amount was also deposited by the petitioner in electronic cash ledger. The appellate Authority by way of impugned appeal order dated 06.05.2025 rejected the appeal of the petitioner on the ground that the appeal was filed beyond the period of limitation and the appellate authority did not have any power to condone the delay in filing the appeal. The order of appeal along with order of cancellation are impugned in the present petition.

6. Learned advocate Mr.Mehta for the petitioner has submitted that the main reason for the cancellation of the registration of the petitioner is the non-filing of return for a continuous period of six months. It was submitted by learned advocate Mr.Mehta that the petitioner is ready and willing to furnish all returns and pay dues as may be sought for by the respondent and the petitioner Company undertakes to pay all the dues alongwith interest and late fees, which can be determined as per law.

6.1. It was submitted that the petitioner-Company undertakes that henceforth it would comply with the provisions of law & file necessary returns, and that any inaction in filing returns would lead to automatic cancellation of its registration.

6.2. Learned advocate Mr. Mehta for the petitioner has submitted that as a last opportunity, the petitioner should be allowed to rectify its bona fide mistake by payment of self assessed tax along with interest and late fees.

6.3. According to learned advocate Mr.Mehta, as ascertained by petitioner, the tax liability comes at Rs.14,56,780/-, being equal amount of SGST i.e. Rs.7,28,390/- and CGST i.e. Rs.7,28,390/. The petitioner would also be liable to pay interest and late penalty on self assessed tax. The petitioner has a balance of Rs.4,33,668/- in its electronic cash ledger, and the remaining amount, as determined, would be paid from the cash ledger.

7. Per contra, learned Government Pleader Ms.Parekh has submitted on the basis of the affidavit-in-reply filed by the respondent that the petitioner has filed all its returns and outstanding dues towards pending tax, interest and penalty upto August, 2025. The same is verified by concerned Assessing Authority. In light of the above facts & circumstances, appropriate orders for revocation of cancellation of registration of the petitioner-Company is required to be passed by this Court. Learned Assistant Government Pleader has relied on para 5 of the affidavit-in-reply filed on behalf of the respondent No.2, which reads as under :

“5. The answering respondent states that the petitioner has filed all his returns & outstanding dues towards pending tax, interest and penalty upto August, 2025. In light of the above facts & circumstances, appropriate orders for revocation of registration of the petitioner is required to be passed by this Hon’ble Court.”

8. Considering the above submissions, it appears that the petitioner has deposited the amount towards tax, interest and late fee and has also filed the return under Section 39 of the Act. On the basis of the statement made by the learned Assistant Government Pleader and the Affidavit-in-reply filed by the respondent, the impugned order(s) passed by the Appellate Authority as well as the respondents cancelling the registration of the petitioner is hereby quashed and set aside. The registration of the petitioner would be restored by the respondent-authorities.

The petition is accordingly disposed of. Rule is made absolute to the aforesaid extent. No order as to costs.