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of <h1>Cancellation of GST registration under Section 29(2)(c) valid for six months non-filing, restoration allowed on compliance</h1> <h3>M/s TARUN CHANDRA SONOWAL Versus THE UNION OF INDIA AND 3 ORS., THE PRINCIPAL COMMISSIONER CENTRAL GOODS AND SERVICES TAX GST BHAWAN KEDAR ROAD GUWAHATI-1., THE SUPERINTENDENT CENTRAL GOODS AND SERVICES TAX NAHARKATIA-1 TINSUKIA ZONE ASSAM., THE ADDITIONAL COMMISISONER (APPEALS) CENTRAL GOODS AND SERVICES TAX GST BHAWAN GUWAHATI-1</h3> M/s TARUN CHANDRA SONOWAL Versus THE UNION OF INDIA AND 3 ORS., THE PRINCIPAL COMMISSIONER CENTRAL GOODS AND SERVICES TAX GST BHAWAN KEDAR ROAD ... 1. ISSUES PRESENTED and CONSIDERED Whether the cancellation of GST registration under Section 29(2)(c) of the CGST Act, 2017 for non-filing of returns for a continuous period of six months or more was validly done. Whether the petitioner can seek restoration or revocation of GST registration after the prescribed time limit for filing such application has expired. The scope and applicability of proviso to sub-rule (4) of Rule 22 of the CGST Rules, 2017 regarding dropping of cancellation proceedings upon compliance by the registered person. The authority and jurisdiction of the proper officer to restore GST registration upon fulfillment of conditions post cancellation. The applicability of limitation periods under Sections 44 and 73(10) of the CGST Act in the context of arrears and restoration of registration. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Validity of GST Registration Cancellation under Section 29(2)(c) of the CGST Act, 2017 Legal Framework and Precedents: Section 29(2)(c) empowers the proper officer to cancel GST registration where a registered person has not furnished returns for a continuous period of six months or more. Rule 22 of the CGST Rules, 2017 prescribes the procedural safeguards and steps for cancellation, including issuance of show cause notice and opportunity to reply. Court's Interpretation and Reasoning: The Court noted that the petitioner failed to file GST returns continuously for six months, triggering the statutory ground for cancellation. The proper officer issued a show cause notice in FORM GST REG-17 with a seven-day period to respond. The petitioner did not respond within the stipulated time, and consequently, the Superintendent passed the cancellation order in FORM GST REG-19. Key Evidence and Findings: The petitioner admitted non-filing of returns for the requisite period and non-appearance for personal hearing or reply submission. The procedural requirements under Rule 22 were complied with by the authorities. Application of Law to Facts: The cancellation was in accordance with statutory provisions and rules. The petitioner's non-compliance with notice timelines justified the ex-parte cancellation. Treatment of Competing Arguments: The petitioner argued lack of familiarity with online procedures and inability to respond in time. However, the Court emphasized the statutory mandate and procedural fairness provided by notice and opportunity. Conclusion: The cancellation of GST registration under Section 29(2)(c) was validly effected following due procedure. Issue 2: Possibility of Restoration or Revocation of GST Registration Post Expiry of Prescribed Time Limit Legal Framework and Precedents: Rule 22(4) of the CGST Rules, 2017 allows dropping of cancellation proceedings if the person furnishes all pending returns and pays full tax dues with interest and late fees. The time limit for filing revocation applications is 270 days from the date of cancellation order. Court's Interpretation and Reasoning: The petitioner's attempt to file revocation was barred by expiration of the 270-day timeline. Nonetheless, the Court referred to the proviso to Rule 22(4), which provides an alternative remedy where the person complies with pending returns and payments even after cancellation. Key Evidence and Findings: The petitioner updated all pending returns and paid dues, but the revocation application was rejected due to lapse of time. Application of Law to Facts: The Court recognized that strict adherence to timelines is required but also acknowledged the proviso allowing dropping of proceedings upon compliance, which may be invoked even after cancellation. Treatment of Competing Arguments: The petitioner contended that inability to file revocation within time should not bar restoration given compliance. The respondents relied on the statutory time limit and rejection of appeal. Conclusion: Although the prescribed timeline for revocation lapsed, the petitioner may still seek restoration by fulfilling conditions under the proviso to Rule 22(4). Issue 3: Scope and Applicability of Proviso to Sub-rule (4) of Rule 22 of the CGST Rules, 2017 Legal Framework and Precedents: The proviso to Rule 22(4) states that if the person furnishes all pending returns and makes full payment of tax dues along with interest and late fees instead of replying to the show cause notice, the proper officer shall drop the proceedings and pass an order in FORM GST REG-20. Court's Interpretation and Reasoning: The Court emphasized that the proviso provides a substantive right to the registered person to have cancellation proceedings dropped upon compliance, even after issuance of show cause notice. It is a protective provision aimed at mitigating harsh consequences of cancellation. Key Evidence and Findings: The petitioner expressed readiness and willingness to comply with all formalities under the proviso. The Court noted that such compliance had been made post cancellation. Application of Law to Facts: The petitioner's compliance with pending returns and payment obligations triggered the applicability of the proviso, entitling the petitioner to have cancellation proceedings dropped and registration restored. Treatment of Competing Arguments: The respondents did not dispute the applicability of the proviso but highlighted procedural limitations and timelines. Conclusion: The proviso to Rule 22(4) is applicable and empowers the proper officer to drop cancellation proceedings and restore registration upon full compliance. Issue 4: Authority and Jurisdiction of the Proper Officer to Restore GST Registration Post Cancellation Legal Framework and Precedents: Rule 22(4) confers authority on the proper officer to drop proceedings and pass an order in FORM GST REG-20 upon compliance. Section 29(2)(c) allows cancellation from any date as deemed fit by the officer. Court's Interpretation and Reasoning: The Court held that the proper officer, being duly empowered, has jurisdiction to consider an application for restoration of registration if the petitioner complies with the conditions prescribed in the proviso to Rule 22(4). The cancellation order does not preclude restoration if statutory conditions are met. Key Evidence and Findings: The petitioner was directed to approach the proper officer within two months with full compliance to seek restoration. Application of Law to Facts: The Court's direction to the petitioner to apply for restoration and the obligation on the proper officer to consider such application expeditiously confirms the officer's authority and jurisdiction. Treatment of Competing Arguments: The respondents' reliance on the expiry of the revocation timeline was balanced against the proviso's remedial mechanism. Conclusion: The proper officer has the jurisdiction and authority to restore GST registration upon fulfillment of the proviso to Rule 22(4). Issue 5: Computation of Limitation Periods under Sections 44 and 73(10) of the CGST Act for Arrears and Restoration Legal Framework and Precedents: Section 73(10) prescribes limitation for recovery of tax arrears. Section 44 deals with filing of returns and related timelines. Court's Interpretation and Reasoning: The Court clarified that the limitation period under Section 73(10) shall be computed from the date of the Court's order, except for the financial year 2024-25, where Section 44 provisions shall apply. The petitioner remains liable to pay arrears including tax, penalty, interest, and late fees. Key Evidence and Findings: The Court's order explicitly states the computation of limitation periods and the petitioner's liability for dues. Application of Law to Facts: The limitation periods for recovery are reset by the Court's order, ensuring the petitioner's compliance is assessed within fresh timelines. Treatment of Competing Arguments: No direct competing arguments on limitation periods were recorded. Conclusion: Limitation periods for recovery of arrears shall be computed from the date of the Court's order, with the petitioner liable to pay all dues accordingly.
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