TaxTMI 
TaxTMI 
Cancellation of GST Registration for Continuous Non-Filing of Returns under Section 29 and Rule 22
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....d for continuous return default; its subsequent request for revocation and appeal were unsuccessful, principally on limitation. The Court nevertheless directed conditional restoration after determination and payment of the outstanding GST dues, applicable interest and late fee or penalty. The decision proceeds on the absence of an allegation of fraud, the taxpayer's willingness to make good the statutory dues, and the practical proposition that restoration may advance both revenue recovery and lawful continuation of business. The ruling does not dilute the obligation to furnish returns. Its significance lies in the judicial treatment of cancellation as a compliance-enforcement measure which, in appropriate facts, may yield to a tightly conditioned opportunity for regularisation rather than permanent exclusion from the GST framework. 2. Legal & Statutory Context Cancellation for continuous non-filing Section 29 of the Central Goods and Services Tax Act, 2017 authorises the proper officer to cancel registration from a date, including a retrospective date, considered fit in specified circumstances. Section 29(2)(c) applies where a registered person, other than a compos....
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.... not exceeding eighteen per cent; interest is calculated from the day succeeding the day on which tax was due. Procedure before cancellation and revocation thereafter Rule 22 of the Central Goods and Services Tax Rules, 2017 gives operational content to Section 29. The proper officer must issue a notice in FORM GST REG-17 and require the person to show cause within seven working days why registration should not be cancelled. The response must be furnished in FORM GST REG-18. If the response is satisfactory, the officer must drop proceedings through FORM GST REG-20. The proviso to Rule 22(4) is central for return-default cases. It states that where a person, instead of replying to a notice for contravention under Section 29(2)(b) or (c), "furnishes all the pending returns and makes full payment of the 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." Thus, before cancellation, full compliance converts the officer's course from a discretionary evaluative exercise into a mandatory requirement to drop the proceedings. After cancellation, Section 30 of the Central Goods and Service....
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....tutory grounds. The absence of fraud does not erase return default. It may nevertheless be relevant to the proportionality of restoration relief, particularly where every pending return and fiscal consequence is required to be discharged before revival. 4. Detailed Commentary & Analysis The principal ruling applies a compliance-and-recovery model. The taxpayer had failed to file the relevant returns for over six months, and the registration was consequently cancelled after a Rule 22 notice. The Court noted that the revenue had not alleged fraudulent activity and accepted the taxpayer's undertaking to pay all outstanding GST dues with applicable interest, late fee and penalty. It held that a different result was not warranted when analogous cases had received restoration on those terms. The operative directions were exacting. The authority was required to ascertain and intimate the payable GST dues, interest and late fee or penalty within thirty days of uploading of the order. The taxpayer then had fifteen further days after intimation to make payment. Registration was to be restored only after receipt of payment. Failure to pay within the stipulated time caused the pet....
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....g filing returns, payment of tax and consequential amounts, and scrutiny-based restrictions on input tax credit. The authority therefore demonstrates that statutory limitation and constitutional remedial jurisdiction operate on separate planes. 2024 (1) TMI 1014 - DELHI HIGH COURT focuses on defective foundational proceedings. A vague notice, absence of reasons, and unexplained retrospective cancellation were held to vitiate the cancellation process. The appellate dismissal on limitation could not survive where the foundational cancellation itself was invalid. The decision reinforces that the mandatory hearing opportunity under Section 29(2) requires meaningful, reasoned and procedurally intelligible action. 2024 (2) TMI 416 - TELANGANA HIGH COURT similarly treats reasonless cancellation as a breach of natural justice. The cancellation and rejection of revocation were set aside, the cancellation order was treated as a show-cause notice, and the taxpayer was given an opportunity to file a detailed response and outstanding returns with late fee. It illustrates that restoration may follow from procedural infirmity, but not at the cost of dispensing with substantive return compli....