2025 (8) TMI 559 - HC - GST

Cancellation of GST Registration under Section 29(2)(c) Valid; Restoration Possible by Filing Returns and Paying Dues

The HC held that cancellation of GST registration under Section 29(2)(c) for non-filing of returns for six months is valid. However, per the proviso to ... Cancellation of GST registration - non-filing of GST returns for a continuous period of six months - petitioner is ready and willing to comply with all the formalities required as per the proviso to sub-rule(4) of Rule 22 of the Central Goods and Services Tax Rules, 2017 - HELD THAT:- As per the provisions of Section 29(2)(c) of the Central Goods and Services Tax Rules, 2017; 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 six months. Rule 22 of the Central Goods and Services Tax 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 of the Central Goods and Services Tax Rules, 2017, that if a person, who has been served with a show cause notice under Section 29(2)(c) of the Central Goods and Services Tax Act, 2017, 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, herein, has been cancelled under Section 29(2)(c) of the Central Goods and Services Tax Act, 2017, for the reason that she 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 of the Central Goods and Services Tax Rules, 2017, and cancellation of registration entailing 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 so empowered, has the authority and jurisdiction to drop the proceedings and pass an appropriate order in the prescribed Form. This writ petition is hereby disposed of by providing that the petitioner, herein, shall approach the concerned authority within a period of 2(two) months from today seeking restoration of her GST registration. ISSUES: Whether the cancellation of GST registration under Section 29(2)(c) of the Central Goods and Services Tax Act, 2017 is valid for non-filing of returns for a continuous period of six months.Whether the proviso to sub-rule (4) of Rule 22 of the Central Goods and Services Tax Rules, 2017 permits restoration of GST registration upon submission of pending returns and full payment of tax dues with interest and late fees.Whether the limitation period for filing an application for revocation of cancellation under the GST Act can be extended or disregarded in circumstances involving hardship or delayed compliance. RULINGS / HOLDINGS: The cancellation of GST registration under Section 29(2)(c) for failure to furnish returns for six continuous months is valid and within the authority of the proper officer.The proviso to sub-rule (4) of Rule 22 of the Central Goods and Services Tax Rules, 2017 explicitly provides 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,' thereby allowing restoration of registration.The limitation period of 270 days for filing an application for revocation of cancellation is binding; however, the Court directed the petitioner to approach the proper officer for restoration within two months, relying on the discretionary power under Rule 22 proviso to facilitate compliance and avoid undue hardship. RATIONALE: The Court applied the statutory framework under Section 29(2)(c) of the Central Goods and Services Tax Act, 2017 and Rule 22 of the Central Goods and Services Tax Rules, 2017, which govern cancellation and restoration of GST registration.The Court emphasized the mandatory procedure involving issuance of a show cause notice (FORM GST REG-17), opportunity to reply (FORM REG-18), and the authority of the proper officer to cancel registration (FORM GST REG-19) or drop proceedings (FORM GST REG-20) upon compliance.The proviso to sub-rule (4) of Rule 22 was interpreted as conferring a remedial mechanism allowing reinstatement of registration when the taxpayer submits all pending returns and pays dues, even after cancellation.The Court noted prior orders in analogous cases to support its approach, reflecting a consistent judicial stance favoring restoration where statutory conditions are met.No dissent or doctrinal shift was indicated; the judgment reaffirmed established principles and procedural safeguards under the GST law.