GST registration cancelled for 6+ months' return defaults; restoration allowed if all returns filed and dues paid, apply in 60 days.

Cancellation of GST registration under s. 29(2)(c) CGST Act for non-filing of returns beyond six months raised the issue whether restoration could be directed despite expiry of the statutory period for revocation. Relying on its earlier decisions construing the proviso to r. 22(4) CGST Rules and noting that cancellation entails serious civil consequences, the HC held that if the taxpayer furnishes all pending returns and makes full payment of tax dues with applicable interest and late fee, the proper officer may drop the cancellation proceedings and restore registration. The writ was disposed of by permitting the taxpayer to apply within 60 days, with a direction to the authority to consider restoration expeditiously in accordance with law.

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1. ISSUES PRESENTED AND CONSIDERED

(i) Whether, where GST registration was cancelled for continuous non-filing of returns for six months, the Court should direct consideration of restoration upon subsequent furnishing of pending returns and payment of dues in terms of the proviso to Rule 22(4) of the CGST Rules, 2017.

(ii) Whether the time computation for action under Section 73(10) of the CGST Act/State GST Act should be directed to run from the date of the Court's order while granting the above restoration-related relief.

2. ISSUE-WISE DETAILED ANALYSIS

Issue (i): Restoration pathway after cancellation for non-filing of returns

Legal framework (as discussed by the Court): The Court proceeded on the basis that cancellation was made for non-filing of returns for a continuous period of six months under Section 29(2)(c) of the Act, and that Rule 22 of the CGST Rules, 2017 prescribes the cancellation procedure. The Court applied the proviso to Rule 22(4), which contemplates dropping cancellation proceedings when, instead of replying to the notice, the person furnishes all pending returns and makes full payment of tax dues along with applicable interest and late fee.

Interpretation and reasoning: The Court found the present case to be identical on facts and law to earlier decisions of the same Court dealing with cancellation for six-month non-filing and the remedial effect of compliance contemplated by the proviso to Rule 22(4). On that basis, and noting the respondents' lack of objection to similar relief, the Court held that the petitioner should be permitted to approach the proper authority for restoration, and that the authority must consider restoration if the petitioner complies with the requirements contemplated by the proviso to Rule 22(4), including furnishing pending returns and clearing dues with interest and late fees.

Conclusions: The Court directed that the petitioner may apply to the concerned authority within 60 days seeking restoration of GST registration. Upon such application and compliance with the proviso to Rule 22(4), the authority must consider the request in accordance with law and take steps for restoration expeditiously. The Court further directed that the petitioner remains liable to pay arrears, namely tax, penalty, interest, and late fees.

Issue (ii): Computation of limitation under Section 73(10)

Legal framework (as discussed by the Court): The Court addressed the period stipulated under Section 73(10) of the CGST Act/State GST Act in connection with the relief being granted.

Interpretation and reasoning: Consistent with the approach adopted in the earlier similar matters it followed, the Court considered it necessary to clarify the computation of the statutory period under Section 73(10) when directing the restoration-consideration mechanism.

Conclusions: The Court ordered that the period stipulated under Section 73(10) of the CGST Act/State GST Act shall be computed from the date of the Court's order.

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