2025 (7) TMI 1399 - HC - GST

Cancellation of GST registration of petitioner - petitioner is ready and willing to comply with all the formalities required as per proviso to subrule (4) of Rule 22 of the CGST Rules 2017 - HELD THAT - As per Section 29(2)(c) 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. Having regard to the fact that the GST registration of the petitioner has been cancelled under Section 29(2)(c) of the CGST Act 2017 for the reason that the petitioner did not submit returns for a period of 6 (six) months or 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 has the authority and jurisdiction to drop the proceedings and pass an 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. If the petitioner submits such an application and complies with all the requirements as provided in the proviso to sub-rule (4) of Rule 22 of the CGST Rules 2017 the concerned authority shall consider the application of the petitioner for restoration of the GST registration and passed necessary orders in accordance with law. Petition disposed off.

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 proviso to sub-rule (4) of Rule 22 of the CGST Rules, 2017 allows for dropping cancellation proceedings upon furnishing all pending returns and full payment of tax dues including interest and late fees.Whether a taxpayer whose GST registration has been cancelled can seek restoration of registration after the prescribed time limit for revocation application has expired.The extent of the authority and jurisdiction of the proper officer in considering restoration of GST registration post-cancellation.

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.The proviso to sub-rule (4) of Rule 22 of the CGST Rules, 2017 mandates that if the person "furnishes all the pending returns and makes full payment of the 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."Even after the expiry of the time limit for filing a revocation application, the proper officer has authority and jurisdiction to consider restoration of registration if the taxpayer complies with the conditions in the proviso to sub-rule (4) of Rule 22.The Court directed that the petitioner shall approach the proper officer within two months to seek restoration by complying with the proviso to sub-rule (4), and the officer shall consider and decide the application expeditiously, preferably within 60 days.

RATIONALE:

The Court applied the statutory framework under Section 29(2)(c) of the CGST Act, 2017, which empowers cancellation of registration for non-filing of returns for six continuous months.Rule 22 of the CGST Rules, 2017, specifically sub-rule (4) and its proviso, provides a procedural safeguard allowing cancellation proceedings to be dropped if the taxpayer submits all pending returns and pays all dues including interest and late fees.The Court recognized the serious civil consequences of cancellation and interpreted the proviso to sub-rule (4) as conferring continuing authority on the proper officer to restore registration upon compliance, notwithstanding the expiry of the formal revocation period.The decision aligns with prior judicial orders addressing similar factual scenarios, reinforcing the remedial nature of the proviso to sub-rule (4) and ensuring fairness to taxpayers impacted by circumstances such as Covid-19 and procedural unfamiliarity.