GST Registration Cancelled for Non-Filing Shall Be Restored Upon

GST Registration Cancelled for Non-Filing Shall Be Restored Upon Complete Payment of Outstanding Dues

Issue

Whether a GST registration cancelled under Section 29(2)(c) for a continuous six-month failure to file returns can be legally restored by the Proper Officer under the proviso to Rule 22(4) if the taxpayer is ready to file all pending returns and clear all outstanding taxes, interest, penalties, and late fees.

Facts

The petitioner is a sole proprietor holding a valid GST registration under the CGST and AGST frameworks.
The petitioner failed to file statutory GST returns for a continuous period of six months.
The tax department issued a Show Cause Notice (SCN) and subsequently passed an order under Section 29(2)(c) cancelling the registration due to this non-filing.
The petitioner’s administrative appeal for the revocation of the cancellation was rejected by the department because it was filed beyond the prescribed statutory limitation period (time-barred).
The petitioner filed a writ petition seeking judicial restoration of the registration, expressing complete willingness to submit all overdue returns and clear the entire tax debt along with interest and late fees.

Decision

The High Court observed that the proviso to Rule 22(4) explicitly empowers the Proper Officer to drop cancellation proceedings if the taxpayer cures the underlying default.
The Proper Officer holds the authority and jurisdiction to issue a restoration order in Form GST REG-20 once all pending returns are filed and all tax arrears are cleared.
Because the cancellation of a GST registration carries severe civil consequences that can completely disrupt a citizen’s business operations, a business should be allowed to restart if it complies with its tax obligations.
The petition was disposed of by granting the petitioner liberty to formally apply for restoration within a specified timeline, directing the authority to process it in accordance with the law.
The petitioner remains strictly liable to pay all outstanding arrears, including the primary tax, interest, applicable penalties, and late fees.

Key Takeaways

Curing the Default Restores the License: The GST framework is designed to collect revenue and enforce compliance, not to permanently shut down businesses. If a taxpayer is willing to clear their entire back-dated tax liability, the law provides a mechanism under Rule 22(4) to drop the cancellation.
Writ Relief Against Time-Barred Rejections: When a taxpayer misses the administrative deadline to appeal a registration cancellation, High Courts can invoke writ jurisdiction to offer a remedy, provided the taxpayer demonstrates a bona fide intent to pay all state dues.
Form GST REG-20 Recovery Path: The Proper Officer is not legally bound to maintain a cancellation if the defaults are resolved. Form GST REG-20 serves as the designated legal instrument to drop proceedings and bring the taxpayer back into the active tax network.

HIGH COURT OF GAUHATI

Mahendra Gurung

Union of India^*

Sanjay Kumar Medhi, J.

WP (C) No. 900 of 2026

FEBRUARY 20, 2026

Amit Goyal and A. Choudhury, Advs. for the Petitioner. B. Gogoi, Ld. Standing Counsel, Ms. M. Das, Ld. Counsel and S.K. Medhi, Ld. C.G.C. for the Respondent.

ORDER

1. Heard Shri A. Goyal, learned counsel for the petitioner and Shri B. Gogoi, learned Standing Counsel, Finance & Taxation for the respondent nos. 2, 3 and 4. Also heard Ms. M. Das, learned counsel appearing on instructions of Shri S.K. Medhi, learned C.G.C. for the Union of India.

2. It is the case of the petitioner that it has been carrying out its proprietorship business under the name & style, “M/S Mahendra Gurung” as the sole proprietor. It is an Assesee registered under the Central Goods and Services Tax (CGST) Act, 2017/Assam Goods and Services Tax (AGST) Act, 2017 bearing registration No. 18ARRPG7135Q1ZX. On the reason 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.ZA181119015721P, dated 11.11.2019 asking it to furnish reply to the aforesaid notice within a period of 7 (seven) 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 21.11.2019 was passed by the Commercial Tax Officer (Superintendent of Taxes) North Lakhimpur-2 whereby the petitioner’s GST registration has been cancelled for not furnishing returns for a continuous period of 6 (six) or more months.

3. The learned counsel for the petitioner submits that due to non-conversant of online procedure and also for the loss sustained during Covid-19, he could not visit the GST portal and accordingly could not submit any reply to the said show cause notice in time. It is further contended that when the petitioner came across the said notice, the time for filing reply and attending the hearing was already over and order had also been uploaded in the portal.

4. Thereafter, the petitioner filed appeal seeking revocation of GST cancellation, however, the same was rejected by the Appellate Authority as the time limit prescribed for filing of appeal was elapsed.

5. Being aggrieved, the petitioner has approached this Court by filing the present writ petition.

6. Shri Goyal, 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.

7. As per Section 29(2)(c), 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. The said Rule 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 subsection (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.”

8. It is discernible from a reading of the proviso to sub-rule (4) of Rule 22 of the CGST Rules 2017 that if a person, who has been served with a show cause notice under Section 29(2)(c) of the CGST Act, 2017, 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.

9. The learned counsel for the petitioner has also referred to an order dated 18.07.2025 passed in WP(C) No. 3926/2025 Dipjyoti Borah v. State of Assam 111 GST 201 (Gauhati) wherein the petitioner therein was similarly situated like the present petitioner. Shri Gogoi, learned Standing Counsel has, however, raised an objection on the ground of delay and has submitted that though the petitioner is relying upon the aforesaid order dated 18.07.2025, the present order may not be treated to be a precedent.

10. Having regard to the fact that the GST registration of the petitioner has been cancelled under Section 29(2)(c) of the CGST Act, 2017 for the reason that the petitioner did not submit returns for a period of 6 (six) months or 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, has the authority and jurisdiction to drop the proceedings and pass an order in the prescribed Form.

11. 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 sub-rule (4) of Rule 22 of the CGST Rules, 2017, the concerned authority shall consider the application of the petitioner for restoration of the GST registration and passed necessary orders in accordance with law. The aforesaid process be completed expeditiously and preferably within an outer limit of 60 days from the date of receipt of the certified copy of this order.

12. 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 2025-26, which shall be as per Section 44 of the Central GST Act/State GST Act. The petitioner herein also be liable to make payment of arrears i.e. tax, penalty, interest and late fees.

13. The writ petition accordingly stands disposed of.

14. It is made clear that the present order may not be treated to be a precedent.