2026 (3) TMI 1137 - HC - GST

Restoration of GST registration if pending returns and tax with interest and late fee are paid; officer drops cancellation.

Petitioners whose GST registration was cancelled for continuous non-filing of returns may seek restoration by furnishing all pending returns and making ... Power to drop cancellation proceedings upon compliance with proviso to Rule 22(4) - non-filing of returns - time limit prescribed for filing of appeal - restoration of registration upon compliance - computation of limitation period. Power to drop proceedings under proviso to sub-rule (4) of Rule 22 of the CGST Rules, 2017 - Authority's jurisdiction to revive/restore registration and drop cancellation proceedings upon compliance with the proviso to sub rule (4) of Rule 22 - HELD THAT:- The Court held that where a person served with a show cause notice under Section 29(2)(c) furnishes all pending returns and makes full payment of tax dues along with applicable interest and late fee as provided in the proviso to sub rule (4) of Rule 22, the proper officer has the authority and jurisdiction to drop the cancellation proceedings and pass the prescribed order (Form GST REG 20). The Court directed that the petitioners be permitted to approach the concerned authority within a specified timeframe and that the authority shall consider and decide such application in accordance with law, completing the process expeditiously. [Paras 8, 10, 11] Petitioners may apply to the proper officer within two months, and on compliance with the proviso to sub rule (4) of Rule 22 the officer shall consider dropping proceedings and pass orders in accordance with law; the matter is remitted to the authority for fresh consideration. Computation of limitation under Section 73(10) of the CGST Act - HELD THAT: - The Court directed that the period stipulated under Section 73(10) of the Central/State GST Act shall be computed from the date of the instant order for the purposes of any recovery proceedings, except that for the financial year 2025 26 the limitation shall be governed by Section 44 of the Central/State GST Act. This clarifies the temporal point from which limitation runs in the present disposal. [Paras 12] Limitation under Section 73(10) shall be computed from the date of this order, with the exception of FY 2025 26 which shall be governed by Section 44; petitioners remain liable for arrears, interest, penalty and late fees. Final Conclusion: Writ petition disposed by permitting the petitioners to apply to the competent authority within two months for restoration of GST registration on compliance with the proviso to sub rule (4) of Rule 22; the authority is directed to decide expeditiously and the limitation for recovery under Section 73(10) is computed from this order (except FY 2025 26 as per Section 44). Issues: Whether petitioners whose GST registration was cancelled under the statutory provision for non-filing of returns can seek restoration of registration by furnishing all pending returns and making full payment of tax dues with interest and late fee as provided in the proviso to sub-rule (4) of Rule 22 of the CGST Rules, 2017, and whether the authority has jurisdiction to drop cancellation proceedings on such compliance.Analysis: The statutory framework comprises Section 29(2)(c) of the Central Goods and Services Tax Act, 2017 which permits cancellation of registration where returns are not furnished for a continuous period of six months, and Rule 22 of the Central Goods and Services Tax Rules, 2017 which prescribes the show cause procedure and remedies. The proviso to sub-rule (4) of Rule 22 permits the proper officer to drop proceedings and pass the prescribed order in Form GST REG-20 where the person furnishes all pending returns and makes full payment of tax dues along with applicable interest and late fee. The petitioners were unable to respond in time but express readiness to furnish pending returns and pay dues; the appellate remedy was time-barred. In these circumstances the appropriate relief is to permit the petitioners to approach the competent authority within a stipulated period, require the authority to consider the application for restoration in accordance with the proviso to sub-rule (4) of Rule 22 and to pass orders expeditiously; further, the period for computing tax recovery under Section 73(10) is to be computed from the date of the instant order subject to the stated exception for the financial year 2025-26 under Section 44.Conclusion: Petitioners are entitled to approach the proper officer within two months to seek restoration of GST registration; on furnishing all pending returns and making full payment of tax dues with applicable interest and late fee as per the proviso to sub-rule (4) of Rule 22 of the Central Goods and Services Tax Rules, 2017, the proper officer has the authority and jurisdiction to drop the cancellation proceedings and pass orders in accordance with law. The authority shall consider and dispose of the application expeditiously preferably within 60 days from receipt of certified copy of this order.