Facts of the Case

The petitioner, Binita Borgohain, a proprietor engaged in the business of executing works contracts, was required to and did obtain registration under the Central Goods and Services Tax Act, 2017. On account of circumstances beyond her control, including the outbreak of the COVID-19 pandemic, she was unable to file her GST returns regularly. A show cause notice dated 15.01.2023 was issued proposing cancellation of her GST registration, and by an order dated 02.03.2023 the registration was cancelled. An appeal preferred by the petitioner against the cancellation was rejected by the appellate authority as time-barred. Aggrieved, and stating that the cancellation had seriously hampered her business, the petitioner approached the Gauhati High Court under Article 226 of the Constitution seeking urgent restoration of her GST registration.

Issues Involved

  1. Whether a GST registration cancelled for non-filing of returns during the COVID-19 period could be restored despite the statutory appeal against cancellation having been rejected as time-barred.
  2. Whether the Court could grant relief by directing restoration on terms of compliance, in exercise of its writ jurisdiction.
  3. What conditions were required to be fulfilled for restoration of registration under the CGST Rules.

Petitioner's Arguments

  • The petitioner's counsel submitted that non-filing of returns was attributable to the COVID-19 pandemic and other circumstances beyond the petitioner's control, not to any wilful default.
  • Cancellation of the registration had seriously hampered the petitioner's ongoing works-contract business, causing urgent commercial prejudice.
  • Rejection of the statutory appeal as time-barred left the petitioner without an effective alternate remedy, justifying invocation of writ jurisdiction.
  • The petitioner represented that all necessary dues had already been deposited, and undertook to pay any further amount found payable under the Rules.
  • An urgent order restoring the GST registration was necessary to allow the petitioner to resume normal business operations.

Respondent's Arguments

  • The Standing Counsel for GST initially sought time to obtain instructions on whether any immediate relief could be granted to the petitioner.
  • On instructions, it was submitted that cancellation of the petitioner's GST registration could be revoked with immediate effect, provided the petitioner filed up-to-date returns and paid the tax amount due along with other statutory dues.
  • The respondents' position was that restoration was permissible strictly in accordance with Rule 23 of the CGST Rules, 2017, and subject to full compliance by the petitioner.
  • No independent opposition was pressed to the writ petition once the petitioner agreed to comply with the payment conditions.

Court Order/Findings

  • The Court took note of the petitioner's grievance and directed the Standing Counsel, GST to obtain instructions on the possibility of immediate relief.
  • On instructions, the respondents agreed that the cancellation could be revoked upon the petitioner filing up-to-date returns and depositing the tax and statutory dues payable under Rule 23 of the CGST Rules, 2017.
  • With the consent of both sides, the Court held there was no justification for keeping the matter pending, and disposed of the writ petition by directing the respondents to restore the GST registration immediately on the petitioner filing returns and depositing all statutory dues.
  • The Court directed that the exercise of restoration be carried out as expeditiously as possible.

Important Clarification

  • Cancellation of GST registration for default in return-filing during the COVID-19 period can be undone even where the statutory appeal against cancellation has become time-barred, by invoking writ jurisdiction.
  • Rule 23 of the CGST Rules, 2017 remains the operative mechanism for restoration, conditioned on filing of all pending returns and payment of tax together with statutory dues (interest, late fee, penalty, as applicable).
  • Courts are inclined to grant consent-based restoration where the department does not seriously dispute that compliance would justify revocation, avoiding a full merits adjudication.
  • Taxpayers whose registration stands cancelled and whose appeal is time-barred are not without remedy; a writ petition offering to comply with Rule 23 conditions is a viable route for restoration.

Sections Involved

  • Rule 23 of the CGST Rules, 2017 — prescribes the procedure for revocation of cancellation of GST registration, including upon filing of returns and payment of dues.
  • Section 29 of the CGST Act, 2017 — empowers the proper officer to cancel GST registration, including for continued default in filing returns.
  • Section 107 of the CGST Act, 2017 — governs appeals against orders of cancellation, including the limitation period that rendered the petitioner's appeal time-barred.

Decision – In Favour of

The writ petition was disposed of in favour of the Assessee, with the Court directing restoration of the GST registration on the petitioner filing up-to-date returns and depositing the statutory dues in terms of Rule 23 of the CGST Rules, 2017.

Related Case Laws

No directly on-point case notes are currently published on this site.

Case Details

  • Court: Gauhati High Court
  • Case No.: WP(C)/5511/2023
  • CNR: GAHC010209552023
  • Coram: Hon'ble Mr. Justice Sanjay Kumar Medhi
  • Decision Date: 17.11.2023
  • Disposal Nature: Disposed of — GST registration to be restored on filing of returns and payment of dues

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