2025 (7) TMI 1203 - HC - GST

Cancellation of petitioner s GST registration for not furnishing returns for a continuous period of six or more months - petitioner is ready and willing to comply with all the formalities required as per proviso to sub-rule (4) of Rule 22 of the CGST Rules 2017 - HELD THAT - As per Section 29(2)(c) of the Act an officer duly empowered may cancel the GST registration of a person from such date including any retrospective date as he deems fit where any registered person has not furnished returns for a continuous period of 6 (six) months. Rule 22 of the CGST Rules 2017 has laid down the procedure for cancellation of the registration - It is discernible from a reading of the proviso to sub-rule (4) of Rule 22 of the Rules of 2017 that if a person who has been served with a show cause notice under Section 29(2)(c) of the Act is ready and willing to furnish all the pending returns and to make full payment of the tax itself along with applicable interest and late fee the officer duly empowered can drop the proceedings and pass an order in the prescribed Form i.e. Form GST REG-20. Having regard to the fact that the GST registration of the petitioner has been cancelled under Section 29(2)(c) of the Act for the reason that the petitioner did not submit returns for a period of 6 (six) months and more and the provisions contained in the proviso to sub-rule (4) of Rule 22 of the CGST Rules 2017 and cancellation of registration entails serious civil consequences this Court is of the considered view that in the event the petitioner approaches the officer duly empowered by furnishing all the pending returns and make full payment of the tax dues along with applicable interest and late fee the officer duly empowered may consider to drop the proceedings and pass an appropriate order in the prescribed Form. This writ petition is disposed of by providing that the petitioner shall approach the concerned authority within a period of 2 (two) months from today seeking restoration of her GST registration.

Summary

ISSUES:

Whether GST registration can be cancelled for non-filing of returns for a continuous period of six months under Section 29(2)(c) of the CGST Act, 2017.Whether the procedural requirements under Rule 22 of the CGST Rules, 2017, including issuance of show cause notice and opportunity for reply or personal hearing, were complied with before cancellation of GST registration.Whether a registered person who has defaulted in filing returns can seek restoration of GST registration by furnishing all pending returns and paying tax dues, interest, and late fees as per proviso to sub-rule (4) of Rule 22 of the CGST Rules, 2017.Whether the time limit for filing an application for revocation of cancellation under the CGST Act can be extended or relaxed in circumstances where the petitioner was unable to file within the prescribed period.

RULINGS / HOLDINGS:

The GST registration was validly cancelled under Section 29(2)(c) of the CGST Act, 2017, for failure to furnish returns for a continuous period of six months, in accordance with the statutory provisions.The cancellation procedure under Rule 22 of the CGST Rules, 2017 requires issuance of a show cause notice in FORM GST REG-17 and an opportunity to reply within seven working days; however, no personal hearing date was notified, and the order was passed ex-parte based on available records.Under the proviso to sub-rule (4) of Rule 22, if the person furnishes all pending returns and makes full payment of 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," thereby allowing restoration of registration.The petitioner's inability to file a revocation application within the prescribed timeline cannot be condoned; however, the Court directed that the petitioner may approach the proper officer within two months to seek restoration by complying with the proviso to sub-rule (4) of Rule 22.

RATIONALE:

The Court applied Section 29(2)(c) of the CGST Act, 2017, which empowers cancellation of GST registration where returns are not filed for six continuous months, and Rule 22 of the CGST Rules, 2017, which prescribes the procedure for cancellation including issuance of show cause notice and opportunity to reply.The proviso to sub-rule (4) of Rule 22 was interpreted strictly to provide a remedial mechanism allowing a defaulting taxpayer to avoid cancellation by filing all pending returns and paying dues, interest, and late fees, after which the officer "shall drop the proceedings."The Court recognized the serious civil consequences of cancellation and referred to precedent where similarly situated taxpayers were allowed restoration upon compliance with statutory conditions.There was no doctrinal shift or dissent; the judgment reaffirmed the statutory scheme and procedural safeguards under the CGST law, emphasizing compliance and procedural fairness.