2026 (3) TMI 728 - HC - GST

GST registration restoration available on filing pending returns and payment of tax, interest and late fees within specified period.

A petitioner whose GST registration was cancelled for non-filing of returns may seek restoration by approaching the competent officer within a limited ... Cancellation of registration for non filing of returns - statutory scheme under Section 29(2)(c) - Entitlement to approach the competent officer for restoration of registration by furnishing pending returns and paying tax, interest and late fees - Compliance by filing pending returns and payment of dues. Power to drop cancellation proceedings on compliance with proviso to Rule 22(4) - Proper officer's duty when a registered person files pending returns and pays tax, interest and late fee after cancellation under Section 29(2)(c) - HELD THAT: - The Court held that the proviso to sub rule (4) of Rule 22, CGST Rules, 2017, entitles the proper officer to drop cancellation proceedings and pass an order in FORM GST REG 20 where the person served with a show cause notice furnishes all pending returns and makes full payment of tax dues along with applicable interest and late fee. In view of the serious civil consequences of cancellation under Section 29(2)(c), the Court directed that if the petitioner approaches the empowered officer within the prescribed period and complies with the proviso, the authority shall consider the application and take necessary steps for restoration of registration expeditiously. The Court also clarified the computation of limitation under Section 73(10) from the date of the order, with the financial year 2024 25 governed by Section 44 of the Act. (Paras. 9, 11-13) [Paras 9, 11, 12, 13] If the petitioner files all pending returns and pays dues as required by the proviso to Rule 22(4), the proper officer may drop the cancellation proceedings and shall consider restoration of GST registration in accordance with law; limitation under Section 73(10) is to be computed from this order except for financial year 2024 25. Final Conclusion: The writ petition is disposed of by directing the petitioner to apply to the concerned authority within two months and, upon compliance with the proviso to Rule 22(4), the authority shall consider restoration of GST registration; computation of limitation under Section 73(10) shall run from this order, with financial year 2024 25 governed by Section 44. Issues: Whether the petitioner, whose GST registration was cancelled under Section 29(2)(c) for non-filing of returns, is entitled to approach the competent officer for restoration of registration by furnishing pending returns and paying tax, interest and late fees, notwithstanding the expiry of the statutory timeline for revocation.Analysis: The statutory scheme under Section 29(2)(c) of the Central Goods and Services Tax Act, 2017 and Rule 22 of the Central Goods and Services Tax Rules, 2017 provides for issuance of show cause notice, an opportunity to reply and a specific proviso to sub-rule (4) of Rule 22 which permits dropping of proceedings where the person furnishes all pending returns and makes full payment of tax, interest and late fee. The petitioner has updated pending returns up to April 2024 and paid dues but could not file a statutory revocation application within the prescribed 270 day period. In view of the serious civil consequences of cancellation and the presence of the proviso to Rule 22(4), the competent officer may consider an application for restoration if the petitioner approaches the authority within a limited time and complies with the conditions in the proviso. The period under Section 73(10) shall be computed from the date of this order except for the financial year 2024-25 which shall be governed by Section 44.Conclusion: The petitioner is permitted to approach the concerned authority within two months to seek restoration of GST registration; if the petitioner furnishes all pending returns and pays tax, interest and late fees in accordance with the proviso to Rule 22(4) of the Central Goods and Services Tax Rules, 2017, the competent authority shall consider and take necessary steps for restoration in accordance with law.