2026 (2) TMI 1391 - HC - GST

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 ... Cancellation of GST registration for non-furnishing of returns - Proviso to Rule 22(4) of the CGST Rules - restoration on filing pending returns and payment - Power to drop proceedings and pass order in FORM GST REG-20 - Application for restoration/revocation after expiry of statutory timeline - Computation of limitation under Section 73(10) - HELD THAT:- As per Section 29(2)(c) of the Act, an officer, duly empowered, may cancel the GST registration of a person from such date, including any retrospective date, as he deems fit, where any registered person, has not furnished returns for a continuous period of 6 (six) months. Rule 22 of the CGST Rules, 2017 has laid down the procedure for cancellation of the registration. Having regard to the fact that the GST registration of the petitioner has been cancelled under Section 29(2)(c) of the Act, for the reason that the petitioners did not submit returns for a period of 6 (six) months and more and the provisions contained in the proviso to sub-rule (4) of Rule 22 of the CGST Rules, 2017 and cancellation of registration entails serious civil consequences, this Court is of the considered view that in the event the petitioner approach the officer, duly empowered, by furnishing all the pending returns and make full payment of the tax dues, along with applicable interest and late fee, the officer duly empowered, may consider to drop the proceedings and pass an appropriate order in the prescribed Form. This writ petition is disposed of by providing that the petitioner shall approach the concerned authority within a period of 2 (two) months from today seeking restoration of her GST registration. If the petitioner submit such an application and complies with all the requirements as provided in the proviso to Rule 22 (4) of the Rules, the concerned authority shall consider the application of the petitioner for restoration of GST registration in accordance with law and shall take necessary steps for restoration of GST registration of the petitioner as expeditiously as possible. The petitioner herein would also be liable to make payment of arrears i.e. tax, penalty, interest and late fees. It is clarified that this order has been passed on the peculiar facts of this case and shall not be taken as a precedent. The writ petition accordingly stands disposed of. 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.