Gauhati HC: Cancellation Process Shall Be Dropped If Dues and GST Returns Are Cleared

The Gauhati High Court, in a ruling, stated that a proper officer will regard dropping GST cancellation proceedings if the taxpayers provide all the due returns and clear the outstanding dues, along with tax, interest, and late fees.

Dhirghat Hardware Stores, a proprietorship firm represented by its proprietor, Mainur Islam, has filed a writ petition contesting the order on 22 March 2023, passed by the Superintendent u/s 29(2)(c) of the CGST Act, 2017. The GST registration of the applicant had been cancelled due to failure to submit returns for 6 consecutive months.

The counsel of the applicant said that the cancellation order was issued without proper acknowledgement of the provisions of Rule 22(4) of the CGST Rules, 2017. As per him, the applicant had earlier submitted all due returns up to March 2023 and paid the whole tax due, including the interest and late fees.

Also, the counsel claimed that under rule 22(4), when the taxpayer provides all the due returns and files the due, then the officer must reject the cancellation proceedings and pass an order in Form GST REG-20 restoring the registration.

The counsel of the state stated that the u/s 29(2)(c), the registration must be cancelled because of the continuous non-filing of the returns.

They cited that the applicant does not reply to the SCN within the said time and that the online system averted revocation post lapse of the 270 days. They considered that the applicant had thereafter cleared all the dues and returns.

Read Also: Gauhati HC Allows Revival of Cancelled GST Reg After Filing Pending Returns & Paying Dues

Under Rule 22 of the CGST Rules, a proper officer can cancel registration for not filing the returns; however, the provision of Rule 22(4) permits these proceedings to be dropped if the taxpayers, after that, comply by filing all the due returns and paying tax, interest, and late fees, a bench comprising Justice Sanjay Kumar Medhi stated.

The court, strict civil outcomes are there concerning cancellation of registration, and if the taxpayer fulfilled the norms of compliance, then the officer is expected to consider restoration. The court referred to the decision in Sanjoy Nath v. Union of India (2023), where a likewise direction was issued for reconsidering GST registration after compliance.

As per the court, if the taxpayer provides all due returns and clears all dues, then the proper officer needs to acknowledge dropping the cancellation proceedings and take measures for the restoration by passing an order in Form REG-20.

The court asked the applicant to approach the related officer within 2 months and asked the authority to process the application for restoration under the statute. As per that, the writ petition was disposed of.