2026 (1) TMI 1560 - HC - GST

GST registration cancellation and revocation require prior opportunity to be heard; restoration warranted when liabilities are discharged.

Cancellation and revocation of GST registration under statutory procedure require adherence to the proviso mandating an opportunity of being heard; ... Cancellation of registration - revocation of cancellation - opportunity of being heard - restoration of GST registration - writ of mandamus under Article 226 - civil consequences of cancellation - retrospective cancellation - HELD THAT:- Section 25 provides for procedure for registration. The relevant provisions in the present facts and circumstances are Section 29, which provides for cancellation or suspension of registration, Section 30 which provides for revocation of cancellation of registration and Rule 23 of the CGST Rules, 2017. There are two fundamental issues which would arise from the conjoint reading of the provisions/rules, firstly, on the grounds which are provided under the provisions of Section 29, it would empower the GST authorities to cancel registration. The cancellation of registration, however, certainly involves civil consequences as it would have an adverse effect on the assessee undertaking its business activities. It is for such reason that the second proviso to Section 29 provides that the officer shall not cancel the registration without giving an opportunity of being heard. Therefore, any action on the part of the authority not adhering to the proviso i.e. not affording an opportunity of being heard, would, per se, be in the teeth of Section 29, hence void ab initio. It is not the case that authorities are powerless to pass an order of revocation of cancellation of registration. Sufficient provision in law has been made and such powers are required to be exercised in appropriate cases and in the manner as provided by law and in the facts and circumstances of the case would warrant. However, we find that all these issues are not taken into consideration as in the present case and such matters unwarrantedly reach the Court. In the facts of the present case, the Revenue has taken a clear position that there are no tax dues, as all the demands have stood satisfied. In our clear opinion, the facts of the present case are not in dispute that there is no outstanding GST liability of the petitioner, and hence, in these circumstances, the petitioner was entitled to the benefit of the restoration of the petitioner’s GST registration and to that effect the petitioner’s application for revocation of the cancellation of its registration was required to be allowed. In these circumstances, the petition needs to succeed as respondent No. 3 has clearly not acted in consonance of the provisions of Section 30 read with Rule 23 of the CGST Rules. The writ petition is accordingly allowed. Issues: Whether the petitioner is entitled to restoration/revocation of cancellation of GST registration under Section 30 of the CGST Act, 2017 read with Rule 23 of the CGST Rules, 2017, where all outstanding tax liabilities have been discharged.Analysis: The Court examined Chapter VI of the CGST Act, specifically Section 29 (cancellation or suspension of registration), Section 30 (revocation of cancellation of registration) and Rule 23 of the CGST Rules, 2017 governing applications for revocation. The provisions require that revocation may be granted subject to prescribed conditions and that applications be decided after giving an opportunity of being heard; Rule 23 prescribes timelines, conditions for filing revocation applications and obligations to furnish returns and pay dues. On the facts, the record showed the petitioner had paid all tax liabilities and the Revenue conceded no outstanding dues remained. The Court relied on consistent authorities holding that keeping registration cancelled despite discharge of dues is not in the interest of Revenue and that authorities are empowered and obliged to revoke cancellation where conditions are met.Conclusion: The petitioner is entitled to revocation of cancellation and restoration of GST registration; the writ petition is allowed in favour of the assessee.