Failure to respond to CGST Notice due to lack of proper internet: Guwahati HC Allows GST Registration Restoration on compliance of Rule 22 (4) of CGST Rule [Read Order]

The Gauhati High Court allowed the assessee to seek restoration of Central Goods and Service Tax (CGST), 2017 registration on compliance with Rule 22(4) of CGST Rule, as the assessee was from a remote area that failed to respond to the CGST Notice due to a lack of proper internet.

Munni Char, the petitioner, has been carrying out her business under the name & style, “Munni Char, Mugasong”. She is the sole proprietor and is an assessee registered under the Central Goods and Services Tax (CGST) Act, 2017/Assam Goods and Services Tax (AGST) Act, 2017. Because of non-filing of GST returns for a continuous period of six months, the petitioner was served with a show cause notice asking her to furnish a reply to the aforesaid notice within a period of 30 (thirty) days from the date of service of notice.

It was mentioned in the aforesaid showcause notice that if the petitioner fails to furnish a reply within the stipulated date or fails to appear for personal hearing on the appointed date and time, the case will be decided ex-parte on the basis of the available records and on merits. However, no date for personal hearing was ever notified. Thereafter, the impugned order dated 17.05.2024 was passed by the Superintendent, Diphu-1, whereby the petitioner’s GST registration has been cancelled for not furnishing returns for a continuous period of 6 (six) or more months.

The petitioner contended that she is resident of remote area of Karbi Anglong where there is lack of proper internet facilities and also non availability of tax Professional who can guide assessees. Therefore, she could not visit the GST portal and could not submit any reply to the said show cause notice in time. It is further contended that when the petitioner came across the said notice, the time for filing reply and attending the hearing was already over and order had also been uploaded in the portal.

The petitioner further contended that she updated all her pending returns upto the month of March, 2024 as allowed by the GST portal and while updating her returns, the petitioner has also discharged all her GST dues along with her late fees and interest.

Thereafter, the petitioner tried to file the necessary application seeking revocation of GST cancellation, however, the same could not be filed as the time limit prescribed for filing of revocation application was elapsed and a message was displayed in the screen “timeline of 270 days from the date of cancellation order provided to taxpayer to file application for revocation of cancellation is expired.”

Mr. Mishra, counsel for the petitioner has submitted that the petitioner is ready and willing to comply with all the formalities required as per proviso to sub-rule (4) of Rule 22 of the CGST Rules, 2017.

As per Section 29(2)(c) of the Act, an officer, duly empowered, may cancel the GST registration of a person from such date, including any retrospective date, as he deems fit, where any registered person, has not furnished returns for a continuous period of 6 (six) months. Rule 22 of the CGST Rules, 2017 has laid down the procedure for cancellation of the registration.

It is discernible from a reading of the proviso to sub-rule (4) of Rule 22 of the Rules of 2017 that if a person, who has been served with a show cause notice under Section 29(2)(c) of the Act, is ready and willing to furnish all the pending returns and to make full payment of the tax itself along with applicable interest and late fee, the officer, duly empowered, can drop the proceedings and pass an order in the prescribed Form i.e. Form GST REG-20.

A single bench of Justice Sanjay Kumar Medhi viewed that in the event the petitioner approaches the officer, duly empowered, by furnishing all the pending returns and make full payment of the tax dues, along with applicable interest and late fee, the officer duly empowered, may consider to drop the proceedings and pass an appropriate order in the prescribed Form.

The writ petition is disposed of by providing that the petitioner shall approach the concerned authority within a period of 2 (two) months from today seeking restoration of her GST registration. If the petitioner submits such an application and complies with all the requirements as provided in the proviso to Rule 22 (4) of the Rules, the concerned authority shall consider the application of the petitioner for restoration of her GST registration in accordance with law and shall take necessary steps for restoration of GST registration of the petitioner as expeditiously as possible.

It is needless to say that the period as stipulated under Section 73 (10) of theCentral GST Act/State GST Act shall be computed from the date of the instant order, except for the financial year 2024-25, which shall be as per Section 44 of the Central GST Act/State GST Act. The petitioner herein would also be liable to make payment of arrears i.e. tax, penalty, interest and late fees.

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