Facts of the case:
In this case, due to non-filing of GST returns for a continuous period exceeding six months, the department issued a show cause notice dated 16.09.2024 under Section 29(2)(c), calling upon the petitioners to explain why their GST registration should not be cancelled. The notice clearly stipulated that failure to respond or appear for personal hearing would result in ex parte adjudication.
However, the petitioners failed to respond within the stipulated time due to lack of familiarity with the online GST system and financial difficulties arising from business losses. Consequently, the proper officer passed an order dated 08.11.2024 cancelling the GST registration.
Aggrieved by the cancellation, the petitioners approached the High Court. They contended that they were now willing to comply with statutory requirements, including filing all pending returns and paying tax dues along with applicable interest and late fees, as contemplated under the proviso to Rule 22(4) of the CGST Rules, 2017. The Revenue opposed the petition, primarily on the ground of delay and also argued that the relief granted in similar cases should not be treated as a binding precedent.
Issue:
Whether a taxpayer whose GST registration has been cancelled for non-filing of returns under Section 29(2)(c) can be permitted to seek restoration of registration by invoking the proviso to Rule 22(4) of the CGST Rules, 2017, upon subsequent compliance of filing returns and payment of dues.
Held that:
The High Court held that cancellation of GST registration carries serious civil consequences and therefore, a liberal approach is warranted where statutory provisions themselves provide an opportunity for restoration. The Court emphasized that the proviso to Rule 22(4) clearly enables a taxpayer to regularize defaults by furnishing pending returns and paying tax dues along with interest and late fees, upon which the proper officer has the power to drop cancellation proceedings.
Taking into account the willingness expressed by the petitioners to comply with all statutory requirements, the Court held that they should be given an opportunity to seek restoration of registration. Instead of directly restoring the registration, the Court adopted a balanced approach by directing the petitioners to approach the proper officer within a specified time frame.
Accordingly, the Court disposed of the writ petition with directions that the petitioners may file an application within two months for restoration of GST registration by complying with all requirements under the proviso to Rule 22(4). Upon such compliance, the proper officer shall consider the request and pass appropriate orders in accordance with law within a reasonable time.
The Court also clarified that statutory timelines under Section 73(10) would be computed from the date of the Court’s order (with specified exceptions), and the petitioners would remain liable to pay all outstanding tax, interest, penalty, and late fees. Importantly, the Court stated that the order shall not be treated as a precedent.
Case Name: M/s. NIT Traders And Digantajit Baruah Versus The Union of India, The Principal Commissioner GST Central Excise And Service Assam, The Superintendent Tezpur. dated 16.03.2026
To read the complete 2026 taxo.online 660
