Facts of the Case

The petitioner's GST registration was cancelled by order dated 01.03.2023 after the petitioner defaulted on GST payment in the month of June (of the relevant year). Registration cancellation under the GST regime carries significant consequences — the taxpayer loses the ability to issue valid tax invoices, its buyers lose the corresponding Input Tax Credit, and it becomes exposed to enforcement action for any unfiled returns during the period of default. By the time the matter came before the Court, however, the petitioner had already deposited the entire outstanding tax and penalty, curing the very default that had triggered the cancellation. The petitioner's counsel pointed out that the matter was squarely covered by an earlier decision of the same High Court dated 25.08.2023 in WPMS No.2382 of 2023 (M/s Rana Building Material Supplier v. Commissioner, State Goods and Services Tax Commissionerate), which dealt with an identical set of facts and had already granted comparable relief.

Issues Involved

  1. Whether a GST registration cancelled for default in tax payment should be restored once the assessee deposits the entire outstanding tax and penalty.
  2. Whether the case is governed by the precedent already laid down in the first petition (Rana Building Material Supplier) on the same point.

Petitioner's Arguments

  • The petitioner's counsel submitted that the petitioner had defaulted on GST payment for the relevant month, resulting in cancellation of registration, but had since deposited all outstanding tax and penalties, and that the case was squarely covered by the Court's own decision dated 25.08.2023 in the first petition dealing with an identical situation.

Respondent's Arguments

  • Counsel for the respondent admitted the position urged by the petitioner's counsel, agreeing that the matter stood covered by the earlier ruling.

Court Order / Findings

  • The Court, with the respondent's counsel conceding the point, disposed of the petition in terms of its own order dated 25.08.2023 passed in the first petition (WPMS No.2382 of 2023), thereby extending the same relief — restoration of GST registration upon full deposit of outstanding tax and penalty — to the present petitioner.

Important Clarification

Where a GST registration has been cancelled for default in payment of tax, and the assessee subsequently clears the entire outstanding tax and penalty, courts have been inclined to direct restoration of registration, particularly where a coordinate or earlier bench of the same court has already granted such relief on identical facts, allowing genuine defaulters a path back into the GST system once dues are cleared. This approach recognises that the purpose of cancellation for non-payment is coercive and remedial rather than punitive — once the underlying default is fully cured, continued denial of registration serves no further public revenue interest and only disrupts the taxpayer's ongoing business and its counterparties' ability to claim Input Tax Credit.

Sections Involved

  • Section 29, CGST Act, 2017 — governs cancellation of GST registration, including for default in payment of tax, and the process for revocation of such cancellation.
  • Section 30, CGST Act, 2017 — provides the mechanism for a registered person to apply for revocation of cancellation of registration.

Decision – In Favour of

The decision is in favour of the Assessee. The petition was decided in terms of the earlier order restoring GST registration upon deposit of outstanding tax and penalty.

Case Details

Court: High Court of Uttarakhand
Case No.: WPMS No.3005 of 2023
Coram: Justice Ravindra Maithani
Date of Order: 02.11.2023

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