Facts of the Case

The petitioner, M/S Arun Kumar Srivastava, a proprietorship, challenged two orders: the order dated 24.08.2022 passed by the Assistant Commissioner, State Tax, Amethi, cancelling its GST registration for non-payment of tax dues, and the order dated 19.10.2023 of the Additional Commissioner (Appeal), Grade-2, State Tax, Ayodhya, dismissing the petitioner's appeal (Appeal No.32 of 2023) on the ground that although returns had been filed and tax paid, interest remained outstanding. Before the High Court, the petitioner's counsel stated that, subsequent to the appellate order, the petitioner had cleared both the tax and the interest dues, and was willing to pay any further amount communicated to him within seven days.

Issues Involved

  1. Whether the petitioner, having cleared the tax and interest dues after the appellate rejection, was entitled to a direction for restoration/renewal of the cancelled GST registration.

Petitioner's Arguments

  • The petitioner submitted that he had, after the appellate order, paid not only the tax amount but also the interest.
  • He undertook to pay any additional amount communicated to him within seven days of such communication, and sought a direction to the department to renew his GST registration.

Respondent's Arguments

  • The State's standing counsel did not dispute the petitioner's instructions regarding payment of tax and interest, and the matter proceeded on the basis of the petitioner's undertaking.

Court Order / Findings

  • Accepting the submission that the petitioner had filed returns and paid the tax and interest, the Court found it appropriate to direct restoration of the registration rather than require fresh proceedings.
  • The respondent authority was directed to take steps to renew the petitioner's GST registration within ten days of communication of the order, subject to communicating any further amount due, which the petitioner was to pay within seven days of such communication.

Important Clarification

  • Once outstanding tax and interest dues that formed the basis of a registration cancellation are cleared, courts are inclined to direct renewal/restoration of GST registration rather than leave the assessee remediless, particularly where the assessee gives an undertaking to clear any residual dues promptly.
  • This provides a practical route for small taxpayers whose registration was cancelled for non-payment to seek restoration on demonstrating subsequent compliance, without needing to establish any illegality in the original cancellation order.

Sections Involved

  • Section 29 of the CGST Act, 2017 - empowers the proper officer to cancel GST registration, including for default in payment of tax.
  • Section 107 of the CGST Act, 2017 - provides for appeal against orders such as registration cancellation.

Decision – In Favour of

The writ petition was disposed of in favour of the Assessee, with a direction to the department to renew the petitioner's GST registration within ten days, subject to payment of any further communicated dues.

Case Details

Allahabad High Court (Lucknow Bench), Writ Tax No. 218 of 2023, Neutral Citation 2023:AHC-LKO:74222; Coram: Hon'ble Alok Mathur, J.; decided on 8 November 2023.

Link to Download the Order

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