Facts of the Case:
In this case, the petitioner owing to continuous non-filing of GST returns for more than six months, the department issued a show cause notice proposing cancellation of registration and fixed a date for reply and personal hearing. The notice warned that failure to respond would result in ex-parte adjudication. As the petitioner neither filed a reply nor appeared for the hearing, the Superintendent passed an order cancelling the GST registration without assigning detailed reasons.
The petitioner submitted that severe financial hardship prevented timely compliance and that he could not access the GST portal within the prescribed period. Upon later discovering the cancellation, he filed all pending returns up to April 2024 and discharged the entire tax liability along with interest and late fees. However, when he attempted to file an application for revocation of cancellation, the GST portal rejected it on the ground that the statutory time limit of 270 days had expired. Aggrieved by the inability to seek restoration through the portal mechanism, the petitioner approached the High Court by way of a writ petition.
Issue:
Whether a taxpayer whose GST registration was cancelled for non-filing of returns can seek restoration when all pending returns and tax dues have been cleared, despite expiry of the statutory time limit for filing a revocation application, in light of the proviso to Rule 22(4) of the CGST Rules.
Held That:
The High Court held that cancellation of GST registration entails serious civil consequences and therefore procedural provisions must be interpreted in a manner that advances substantive compliance. On a conjoint reading of Section 29(2)(c) of the CGST Act and Rule 22 of the CGST Rules, particularly the proviso to Rule 22(4), the Court observed that where a taxpayer furnishes all pending returns and makes full payment of tax dues along with applicable interest and late fees, the proper officer is empowered to drop cancellation proceedings.
Considering that the petitioner had already regularised all pending statutory compliances and expressed readiness to fulfil all formal requirements, the Court found it appropriate to grant an opportunity for restoration. The Court directed the petitioner to approach the competent authority within two months with a request for restoration of registration. Upon such application and satisfaction of the conditions prescribed under the proviso to Rule 22(4), the proper officer was directed to consider restoration in accordance with law and take necessary steps expeditiously.
The Court also clarified that limitation under Section 73(10) of the CGST/State GST Acts would be computed from the date of the Court’s order (except for FY 2024-25, which would be governed by Section 44). The petitioner would remain liable for all statutory dues including tax, interest, penalty, and late fees.
The ruling underscores that GST registration cancellation, though statutorily permitted for return default, should not become punitive where the taxpayer subsequently regularises compliance. Courts may intervene to balance procedural timelines with substantive justice.
The proviso to Rule 22(4) acts as a remedial mechanism enabling restoration where defaults are cured through filing of returns and payment of dues.
Case Name: Panchatantra Tours And Travels Versus The Union of India, The Principal Commissioner of Central Goods And Service Guwahati, The Superintendent Office of The Principal Commissioner of Central Goods And Service Tax. dated 11.03.2026
To read the complete judgement 2026 Taxo.online 606
