Order cancelling GST registration under Section 29(2)(c) quashed; petitioner to apply for revocation and pay dues

HC set aside the order canceling the petitioner's GST registration under Section 29(2)(c) for non-filing of returns for six months, and disposed of the writ petition. The petitioner is directed to apply to the concerned authority within one month for revocation of cancellation and restoration of registration, subject to payment of statutory dues as contemplated by the relevant CGST rule proviso and consistent with coordinate-bench precedents. The impugned cancellation order is quashed and the matter is disposed.

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The judgment from the Gauhati High Court addresses the cancellation of GST registration of the petitioner due to non-filing of returns for a continuous period of six months, as mandated under Section 29(2)(c) of the GST Act, 2017. The petitioner, engaged in works contracts, was unable to comply due to the impact of the Covid-19 pandemic on his business operations.

Issues Presented and Considered

The core legal questions considered in this judgment include:

• Whether the cancellation of the petitioner's GST registration due to non-filing of returns for six months is justified under Section 29(2)(c) of the GST Act, 2017.
• Whether the petitioner is entitled to the revocation of the cancellation of GST registration based on the proviso to Rule 22(4) of the CGST Rules, 2017, which allows for revocation if pending returns are filed and dues are paid.
• Whether the Court can direct the respondent authorities to reconsider the petitioner's request for revocation of cancellation in light of similar precedents set by the Court.

Issue-Wise Detailed Analysis

Relevant Legal Framework and Precedents

Section 29(2)(c) of the GST Act, 2017 allows for the cancellation of registration if a registered person fails to furnish returns for a continuous period of six months. Rule 22 of the CGST Rules, 2017 outlines the procedure for cancellation and potential revocation of registration. The proviso to Rule 22(4) provides that if a person files all pending returns and pays the due taxes, interest, and late fees, the proceedings for cancellation can be dropped.

Court's Interpretation and Reasoning

The Court interpreted the provisions of Section 29(2)(c) and Rule 22, emphasizing the discretionary power of the proper officer to revoke cancellation if the taxpayer complies with filing and payment requirements. The Court acknowledged the impact of the Covid-19 pandemic as a significant factor affecting the petitioner's ability to file returns timely.

Key Evidence and Findings

The petitioner failed to file returns for over six months due to financial hardships caused by the pandemic. The petitioner filed returns up to February 2021 but could not apply for revocation of cancellation within the prescribed time limit. The petitioner also missed the deadline to appeal under Section 107 of the GST Act.

Application of Law to Facts

Given the petitioner's willingness to comply with the filing and payment requirements post-pandemic and the Court's previous orders in similar cases, the Court found it appropriate to allow the petitioner to seek revocation of the cancellation of GST registration.

Treatment of Competing Arguments

The respondent did not dispute the Court's previous decisions in similar cases, where GST registrations were restored under comparable circumstances. The Court noted the importance of including the petitioner within the GST regime for revenue collection purposes.

Significant Holdings

Core Principles Established

The Court underscored the principle that taxpayers should be given an opportunity to rectify their non-compliance, especially in extraordinary circumstances like the Covid-19 pandemic, provided they are willing to fulfill their statutory obligations.

Final Determinations on Each Issue

The Court set aside the cancellation order dated 10.02.2021 and directed the petitioner to approach the concerned authority within one month to seek revocation of cancellation. The authority must inform the petitioner of any outstanding dues, which the petitioner must pay to have the GST registration restored.

The judgment concludes with the disposal of the writ petition, emphasizing the need for the petitioner to comply with statutory requirements to facilitate the restoration of GST registration, thereby aligning with the Court's approach in similar cases.

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