Facts of the Case:

In this case, the petitioner challenged the appellate order dated 04.10.2024.  By the said order, the appellate authority dismissed the petitioner’s appeal filed under Section 107 of the CGST Act, 2017 and affirmed the order of the proper officer cancelling the petitioner’s GST registration.

The cancellation of registration was on account of non-filing of GST returns within the statutory period. The petitioner contended that although he was willing to file the pending returns and regularise compliance, the proper authority did not permit submission of returns on the ground that the statutory time limit had expired. There was also a dispute between the parties regarding service of notice and whether the petitioner had effective knowledge of the proceedings leading to cancellation. The petitioner relied upon a judgment of the Coordinate Bench at Gwalior in M/s. K.N. Developers and Buildcon Pvt. Ltd. vs. State of M.P. & Ors. (W.P. No. 29802/2025), wherein identical orders cancelling GST registration and denying revocation were quashed, subject to conditions. The petitioner fairly submitted that he was ready to pay costs and comply with all statutory requirements if one opportunity was granted to revive the registration and resume business.

The respondents, on the other hand, relied upon Sections 25, 29 and 30 of the CGST Act, 2017 and Rules 21, 22 and 23 of the CGST Rules, 2017, contending that sufficient opportunity had been granted and that the cancellation was in accordance with law, though it was conceded that the petitioner could make a fresh representation.

Issue:

Whether the cancellation of GST registration and rejection of the appeal could be sustained when the petitioner was denied an opportunity to file pending returns solely on the ground of expiry of the statutory period, and whether the petitioner was entitled to one opportunity for revocation of registration subject to conditions.

Held that:

The High Court held that the impugned appellate order affirming the cancellation of GST registration could not be sustained in the facts of the case. The Court noted that the issue involved was squarely covered by the judgment of the Coordinate Bench at Gwalior in M/s. K.N. Developers and Buildcon Pvt. Ltd., wherein identical orders were set aside to afford the assessee an opportunity to regularise compliance.

The Court observed that while the statutory provisions empower the authorities to cancel registration for default in filing returns, such powers should not be exercised in a manner that permanently deprives a taxpayer of the right to carry on business, particularly when the taxpayer is willing to file all pending returns and discharge tax liabilities. Denial of an opportunity to regularise registration merely on the ground of lapse of time was held to be harsh and disproportionate.

The Court set aside the impugned order dated 04.10.2024 passed by the Joint Commissioner (Appeals) and the consequential orders cancelling registration. The petitioner was directed to submit all pending GST returns, especially for the period during which the registration remained cancelled. Upon such submission, the proper authority was directed to consider the petitioner’s case for revocation of cancellation of registration in accordance with law.

Case Name: Arihant Shree Motors LLP Through Partner Divyakumar Versus Union of India And Others dated 18.12.2025

To read the complete judgement 2025 Taxo.online 3378