Case Facts
The case is concerned with the fact that the department issued a show cause notice dated 16.09.2024 u/s 29(2)(c) because of not filing GST returns for a successive duration surpassing 6 months, asking the applicants to elaborate why their GST registrations should not be cancelled.
As per the notice, failure to answer or appear for a personal hearing shall result in ex parte adjudication.
The applicants did not answer within the specified duration because of the cluelessness of the online GST system and financial issues emerging from the business losses. Therefore, on 08.11.2024, the proper officer passed an order, cancelling the GST registration.
The applicants, dissatisfied with the cancellation, approached the High Court. They claimed that they want to comply with the regulatory norms, along with filing all the pending returns and filing tax dues, including applicable interest and late fees, as contemplated under the proviso to Rule 22(4) of the CGST Rules, 2017.
The petition has been countered by the revenue due to the delay, and it claimed that the relief granted in similar cases must not be considered a binding precedent.
Issue:
Whether a taxpayer whose GST registration has been cancelled for not filing returns u/s 29(2)(c) can be allowed to seek restoration of registration by invoking the proviso to Rule 22(4) of the CGST Rules, 2017, upon subsequent compliance with filing returns and payment of dues.
Held That:
HC considered that the GST registration cancellation can cause serious civil outcomes and thus, a liberal method is needed where regulatory norms furnish a chance for restoration.
The court outlined that the proviso to Rule 22(4) allows a taxpayer to regularize defaults by providing pending returns and filing tax dues, including the interest and late fees, on which the proper officer has the authority to drop cancellation proceedings.
The court, considering the willingness of the applicants to follow regulatory provisions, stated that they must be provided a chance to seek restoration of registration.
Read Also: Gauhati HC: Cancelled GST Registration Can Be Restored, Provided Pending Dues are Cleared
The court, rather than restoring the registration, chose a balanced approach by asking the applicants to approach the proper officer within the mentioned time duration.
As per that, the court disposed of the writ petition with directions that the applicants can submit an application in 2 months for the GST registration restoration via adhering to all the provisions under the proviso to Rule 22(4).
The proper officer on the same compliance shall acknowledge the request and pass pertinent orders as per the law within the said time.
The court mentioned that the regulatory timelines u/s 73(10) shall be evaluated from the date of the court’s order (with the mentioned exceptions), and the applicants shall remain obligated to file all the due tax, interest, penalty, and late fees. The court mentioned that the order will be considered as a precedent.
| Case Title | M/s. NIT Traders vs. The Union of India |
| Case No. | WP(C)/1360/2026 |
| For Petitioner | Ms. M L Gope, Ms. N Hawelia, Mr S K Saha, Ms S Sarkar |
| For Respondent | Mr. S K Medhi |
| Guwahati High Court | Read Order |
