GST registration cancellation for non-filing may be reconsidered if pending returns and dues are fully paid.

Cancellation of GST registration for continuous non-filing of returns may be dropped where the registered person furnishes all pending returns and pays the tax dues, interest and late fee as required by the proviso to Rule 22(4) of the CGST Rules. Section 29(2)(c) authorises cancellation for non-filing, but Rule 22 requires notice and reply before the proper officer decides the matter. If the taxpayer complies with the proviso, the cancellation proceedings are to be reconsidered and restoration can be pursued through the competent authority in accordance with law.

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Issues: Whether cancellation of GST registration for non-filing of returns could be reconsidered and restoration directed when the registered person was willing to furnish all pending returns and pay the tax dues, interest and late fee in terms of the proviso to Rule 22(4) of the CGST Rules, 2017.

Analysis: Section 29(2)(c) empowers cancellation of registration for continuous non-filing of returns, while Rule 22 prescribes the notice-and-reply procedure. The proviso to Rule 22(4) contemplates that where the person, instead of merely replying to the show-cause notice, furnishes all pending returns and makes full payment of tax dues with applicable interest and late fee, the proper officer shall drop the cancellation proceedings and issue the prescribed order. Since cancellation of registration carries serious civil consequences, the Court held that the petitioners' request for restoration deserved consideration by the competent authority upon compliance with the stated requirements.

Conclusion: The petitioners were entitled to have their case considered for restoration of GST registration on filing the requisite application and compliance with the proviso to Rule 22(4), and the competent authority was directed to take necessary steps in accordance with law.

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