Facts of the Case

The petitioner, Sanjoy Nath, sole proprietor of a firm in his own name, was registered as a dealer under the Central Goods and Services Tax Act, 2017, and was issued a registration certificate in Form GST REG-06 bearing GSTIN 18AMNPN3159NIZA with effect from 16.11.2019. He was issued a show cause notice dated 08.07.2022 asking him to show cause why his registration should not be cancelled under Section 29(2)(c) of the CGST Act for non-furnishing of returns under Section 39 for a continuous period of six or more months, and was directed to appear in person on 07.08.2022. The petitioner submitted his reply on 08.08.2022 and made submissions at the hearing, but the authority nevertheless passed the impugned order dated 11.08.2022 cancelling his GST registration under Section 29(2)(c) read with Rule 22 of the CGST Rules, 2017.

Issues Involved

  1. Whether the cancellation of the petitioner's GST registration under Section 29(2)(c) of the CGST Act for non-filing of returns for six continuous months was in accordance with law.
  2. Whether the petitioner could seek restoration of his registration by complying with the proviso to Rule 22(4) of the CGST Rules, 2017.
  3. What timeline and conditions should govern the petitioner's application for restoration.

Petitioner's Arguments

  • Due to reasons beyond his control, the petitioner could not submit the returns required under Section 39(1) of the CGST Act, 2017 for a period of about six months or more.
  • He was ready and willing to comply with all the formalities required under the proviso to sub-rule (4) of Rule 22 of the CGST Rules, 2017, namely filing all pending returns and paying the full tax dues along with applicable interest and late fee.
  • Relied on an earlier order dated 11.10.2023 in W.P.(C) No. 6003/2023, Sri Bhupender Pal Singh vs. The State of Assam and 2 Others, involving a similarly situated petitioner, to support the relief sought.

Respondent's Arguments

  • Counsel for the GST authorities did not seriously contest the availability of the restoration route under the proviso to Rule 22(4) of the CGST Rules, and jointly referred, along with the petitioner's counsel, to the precedent in Sri Bhupender Pal Singh as governing similarly placed taxpayers.

Court Order/Findings

  • The Court set out Rule 22 of the CGST Rules, 2017 in full, explaining the procedure for cancellation of registration on a show cause notice under Section 29.
  • Where a person served with a show cause notice under Section 29(2)(c) is ready and willing to furnish all pending returns and pay the tax dues in full along with applicable interest and late fee, the proper officer, under the proviso to Rule 22(4) of the CGST Rules, 2017, has the authority to drop the cancellation proceedings and restore the registration in Form GST REG-20.
  • The writ petition was disposed of with a direction that the petitioner approach the concerned authority within two months seeking restoration of his GST registration.
  • If the petitioner files such an application and complies with all requirements under the proviso to Rule 22(4), the authority must consider the application in accordance with law and take steps for restoration as expeditiously as possible.

Important Clarification

  • A GST registration cancelled under Section 29(2)(c) of the CGST Act for non-filing of returns for six or more continuous months is not necessarily final: the proviso to Rule 22(4) of the CGST Rules, 2017 allows the proper officer to drop the cancellation and restore the registration if the taxpayer files all pending returns and pays the full tax dues with interest and late fee.
  • Courts routinely direct such taxpayers to pursue this administrative restoration route within a fixed time frame rather than adjudicating the validity of the cancellation itself.

Sections Involved

  • Section 29(2)(c), CGST Act, 2017 - empowers cancellation of GST registration where a registered person has not furnished returns for a continuous period of six months.
  • Section 39(1), CGST Act, 2017 - requires a registered person to furnish periodic returns of inward and outward supplies, input tax credit availed, and tax paid.
  • Rule 22, CGST Rules, 2017 - lays down the procedure for cancellation of registration, including the proviso to sub-rule (4) permitting restoration on compliance.

Decision - In Favour of

The decision is disposed of with directions, in part in favour of the Assessee. The Court did not set aside the cancellation on merits but opened a clear administrative pathway for the petitioner to secure restoration of his GST registration within two months upon fulfilling the statutory conditions.

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)/6366/2023
  • CNR: GAHC010245592023
  • Coram: Justice Manish Choudhury
  • Decision Date: 29 November 2023
  • Disposal Nature: Disposed of with directions

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