Guwahati HC: Upon Filing Due Returns & Paying Tax, Extra Charges and Penalties, GSTIN Will Be Restored

The esteemed Guwahati High Court, in the matter of Sanjoy Nath v. Union of India [WP No. 6366 of 2023, dated November 29, 2023], resolved the writ petition by instructing the Revenue Department to undertake requisite measures to reinstate the Petitioner’s GST registration, provided that the Petitioner is willing to adhere to all the stipulations outlined in the proviso to Rule 22(4) of the Central GST Rules, 2017 (“the CGST Rules”). This entails the submission of outstanding returns and the settlement of taxes, inclusive of interest and penalties.

Revenue Department Facts

The Revenue Department (“the Respondent”) issued a Show Cause Notice dated July 8, 2022 (“the SCN”) to Sanjoy Nath (“the Petitioner”), a sole proprietorship firm, questioning why the Petitioner’s GST registration should not be revoked for failure to submit returns as mandated by Section 39 of the Central Goods and Services Tax Act, 2017 (“the CGST Act”) for a consecutive period of six months.

Subsequently, the Respondent, through an order dated August 11, 2022 (“the Impugned Order”), cancelled the Petitioner’s GST Registration under Section 29(2)(c) of the CGST Act, in conjunction with Rule 22 of the CGST Rules, citing the aforementioned reason.

Dissatisfied with the Impugned Order, the Petitioner initiated a writ petition before the esteemed Guwahati High Court seeking the reinstatement of the Petitioner’s GST registration.

Issue of Goods and Services Tax Registration

Can GST Registration be restored when the assessee submits overdue returns and settles the corresponding taxes, including interest and penalties?

Held of Guwahati High Court Case

The Hon’ble Guwahati High Court in the case of WP No. 6366 of 2023 held as under:

• Observing that Section 39(1) of the CGST Act mandates registered individuals to electronically submit monthly returns containing details of inward and outward supplies, ITC availed, tax payable and paid, and other relevant particulars.
• It is further noted that Section 29(2)(c) of the CGST Act empowers officers to cancel GST registration when a registered person fails to file returns continuously for six months. Additionally, Rule 22 of the CGST Rules outlines the cancellation procedure.
• Noting the proviso to Rule 22(4) of the CGST Rules, it is observed that officers can drop proceedings and issue orders using Form Goods & Service Tax Reg-01 if a person, served a Show Cause Notice under Section 29(2)(c) of the CGST Act, is prepared to furnish pending returns and settle the tax, along with applicable interest and late fees.
• Expressing the opinion that considering the aforementioned provisions, the Respondent Authority is authorized to terminate proceedings and issue orders in the prescribed form if the Petitioner approaches the Respondent, expressing readiness to submit pending returns and make full payments of tax, interest, and late fees. Consequently, the writ petition is disposed of.
• Directing the Petitioner to approach the Respondent Authority and urging the Respondent to consider the Petitioner’s application, it is further directed that the Respondent shall take necessary measures to restore the Petitioner’s GST registration if the Petitioner is willing to adhere to all the requirements outlined in Rule 22(4) of the Central Goods and Services Tax Rules.

Relevance Provision:

Rule 22(4) of CGST Rules;

“Rule 22: Cancellation of Registration:-

(4) Where the reply furnished under sub-rule (2) or in response to the notice issued under sub-rule (2A) of rule 21A is found to be satisfactory, the proper officer shall drop the proceedings and pass an order in FORM GST REG–20:

Provided that where the person instead of replying to the notice served under sub-rule (1) for contravention of the provisions contained in clause (b) or clause (c) of subsection (2) of section 29, furnishes all the pending returns and makes full payment of the tax dues along with applicable interest and late fee, the proper officer shall drop the proceedings and pass an order in FORM GST-REG- 20.”