GST registration cancellation can be reconsidered when pending returns are filed and dues, interest and late fee are paid.

Cancellation of GST registration for continuous non-filing of returns under the CGST Act was treated as capable of being reconsidered where the registered person subsequently furnished all pending returns and paid the tax dues, interest and late fee. The proviso to Rule 22(4) of the CGST Rules permits the proper officer to drop cancellation proceedings and pass the prescribed order when those compliance conditions are met instead of a reply to the notice. Given the serious civil consequences of cancellation, the HC permitted the petitioner to apply for restoration before the competent authority, which was directed to consider reinstatement if the rule-based conditions were satisfied.

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Issues: Whether cancellation of GST registration could be considered for restoration where the registered person subsequently filed the pending returns and paid the tax dues with applicable interest and late fee under the proviso to Rule 22(4) of the CGST Rules, 2017.

Analysis: The cancellation had been made on the ground of continuous non-filing of returns for six months under Section 29(2)(c) of the CGST Act, 2017. The proviso to Rule 22(4) permits the proper officer to drop the cancellation proceedings and pass the prescribed order where the person, instead of replying to the notice, furnishes all pending returns and makes full payment of the tax dues together with applicable interest and late fee. Since cancellation of registration carries serious civil consequences, the appropriate course was to permit the petitioner to approach the competent authority with compliance of the stated conditions and seek restoration in accordance with law.

Conclusion: The petitioner was permitted to apply before the competent authority for restoration of GST registration within the time granted by the Court, and the authority was directed to consider restoration if the conditions under Rule 22(4) were satisfied.

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