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Issues: Whether the petitioners whose GST registration was cancelled under Section 29(2)(c) for non-filing of returns can have the cancellation proceedings dropped and seek restoration of registration by furnishing all pending returns and making full payment of tax, interest and late fee as provided in the proviso to sub-rule (4) of Rule 22 of the Central Goods and Services Tax Rules, 2017.
Analysis: The Court identified Section 29(2)(c) of the Central Goods and Services Tax Act, 2017 as empowering an officer to cancel registration where returns have not been furnished for a continuous period of six months, and Rule 22 of the Central Goods and Services Tax Rules, 2017 as prescribing the procedure for cancellation including issuance of FORM GST REG-17, reply in FORM REG-18 and orders in FORM GST REG-19 and FORM GST REG-20. The proviso to sub-rule (4) of Rule 22 allows the proper officer to drop cancellation proceedings and pass an order in FORM GST REG-20 where the person furnishes all pending returns and makes full payment of tax dues with applicable interest and late fee. The Court noted that cancellation entails serious civil consequences but that the statutory scheme vests authority in the empowered officer to consider restoration where the petitioner complies with the proviso. The Court therefore directed that the petitioners be permitted to approach the competent authority within two months, and that if they comply with the proviso, the authority shall consider and pass orders in accordance with law, preferably within 60 days; the Court also addressed computation of limitation under Section 73(10) and Section 44 for the financial year 2025-26.
Conclusion: The petitioners are permitted to apply to the competent authority within two months for restoration of GST registration by furnishing all pending returns and making full payment of tax, interest and late fee; upon such compliance the empowered officer shall consider the application and may drop the cancellation proceedings and pass appropriate orders under the proviso to sub-rule (4) of Rule 22 of the Central Goods and Services Tax Rules, 2017. The writ petition is disposed of accordingly.
Ratio Decidendi: Where a registered person, whose registration is cancelled for non-filing of returns under Section 29(2)(c) of the Central Goods and Services Tax Act, 2017, furnishes all pending returns and makes full payment of tax, interest and late fee as required by the proviso to sub-rule (4) of Rule 22 of the Central Goods and Services Tax Rules, 2017, the proper officer has authority to drop the cancellation proceedings and pass an order in FORM GST REG-20.
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