Restoration of GST registration by furnishing pending returns and paying dues with interest and late fee permits dropping cancellation proceedings.

A cancelled GST registration for non filing (Section 29(2)(c)) can be restored if the person furnishes all pending returns and makes full payment of tax dues with applicable interest and late fee under the proviso to sub rule (4) of Rule 22 of the CGST Rules; on such compliance the proper officer is required to drop cancellation proceedings and pass an order in FORM GST REG 20. The document directs that a taxpayer who has filed pending returns and paid dues but missed procedural timelines may approach the competent authority within the specified limited period for consideration and restoration in accordance with the proviso.

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Issues: Whether the petitioner, whose GST registration was cancelled under Section 29(2)(c) for non-filing of returns, can seek restoration of registration by furnishing pending returns and making full payment of tax dues with interest and late fees under the proviso to sub-rule (4) of Rule 22 of the Central Goods and Services Tax Rules, 2017.

Analysis: The cancellation power under Section 29(2)(c) of the Central Goods and Services Tax Act, 2017 is exercisable where a registered person has not furnished returns for a continuous period of six months. Rule 22 of the Central Goods and Services Tax Rules, 2017 prescribes the procedure for cancellation, including issuance of show cause notice and the manner of reply. The proviso to sub-rule (4) of Rule 22 provides that if the person furnishes all pending returns and makes full payment of 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. The Court observed that cancellation entails serious civil consequences and that the statutory scheme permits restoration where the taxpayer complies with the proviso to Rule 22(4). On the facts, the petitioner asserts having filed pending returns up to April 2024 and paid dues, but was unable to file a revocation application due to expiry of the portal timeline; the appeal filed earlier was dismissed. Having regard to the statutory provision and precedent relied upon, the Court directed that the petitioner be permitted to approach the competent authority within a limited time to seek restoration and that the authority shall consider the application in accordance with law if the petitioner complies with the proviso.

Conclusion: The petitioner is entitled to approach the concerned authority within two months from the date of the order and, upon furnishing all pending returns and making full payment of tax dues with applicable interest and late fees in accordance with the proviso to sub-rule (4) of Rule 22 of the Central Goods and Services Tax Rules, 2017, the authority shall consider the application for restoration of GST registration and take necessary steps for restoration as expeditiously as possible.

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