Gauhati High Court Clarifies Restoration of GST Registration Upon Compliance With Rule 22(4) Proviso of CGST Rules

In a significant order, the Gauhati High Court addressed the issue of restoration of GST registration cancelled due to non-filing of returns, clarifying the legal position under the Central Goods and Services Tax (CGST) Rules, 2017.

The petitioner, engaged in works contract services, challenged the cancellation of his GST registration by the Superintendent, Goods and Service Tax, Bhalukpong Division. The cancellation followed a show-cause notice issued for non-filing of GST returns for six consecutive months. The petitioner attributed the default to his tax consultant’s negligence and stated that he had since updated his GST returns up to April 2024. However, he was unable to file an application for revocation of cancellation within the prescribed time limit.

During the hearing, the petitioner relied on a previous judgment of the Gauhati High Court in Dhirghat Hardware Stores & Anr. v. Union of India & Ors., where the court had allowed restoration of GST registration in similar circumstances. The respondent’s counsel conceded that the facts and law in the present case were analogous to those in Dhirghat Hardware Stores.

The court examined the relevant statutory provisions, particularly Section 29(2)(c) of the CGST Act and Rule 22 of the CGST Rules, 2017. The court emphasized the proviso to Rule 22(4), which allows the proper officer to drop cancellation proceedings and restore registration if the taxpayer furnishes all pending returns and pays the full amount of tax, interest, and late fees. The court noted that cancellation of GST registration has serious civil consequences and that the law provides an opportunity for restoration upon compliance.

Relying on its earlier decisions, the court held that the petitioner should be afforded the same relief as in Dhirghat Hardware Stores. The court directed that the petitioner may approach the concerned authority within 60 days, and if all requirements under the proviso to Rule 22(4) are met, the authority must consider and process the application for restoration of GST registration in accordance with law. The court further clarified that the computation of limitation under Section 73(10) of the CGST Act shall be from the date of the order, except for the financial year 2024-25, which will be governed by Section 44.

The writ petition was accordingly disposed of, with the court reiterating the principle that restoration of GST registration is permissible upon full compliance with the statutory requirements, even after cancellation for non-filing of returns, provided the taxpayer acts within the stipulated time and fulfills all dues.