Gauhati HC allows Defaulting GST Firm to Seek Revocation of Cancelled Registration, Orders Bank Accounts Defreezing Subject to Security [Read Order]

In a recent ruling, the Gauhati High Court allowed a defaulting GST ( Goods and Services Tax ) firm to apply for revocation of its cancelled GST registration and ordered that its bank accounts be defreezed after such applications are filed, subject to furnishing security under Rule 159(5) of the Assam GST Rules, 2017.

N Chetia & Sons Trading, a partnership firm, and its partners filed a writ petition challenging cancellation of GST registration in 2021 and later recovery actions. The firm said its registration was cancelled after a show cause notice dated 23.08.2021 for not filing monthly returns and not paying GST dues.

After cancellation, the department attached the firm’s bank accounts and also wrote to Dinjan MES authorities not to give work to the firm. The petitioners also challenged later show cause notices and demand proceedings for different financial years.

The petitioners argued that the managing partner was not technically aware and the notice was not physically served, it was only uploaded in the portal. They argued that once GST is cancelled, the portal blocks filing of GSTR-1 and GSTR-3B, so they could not file pending returns. They also said since bank accounts were frozen, they cannot make payments. They requested to pay dues in installments under Section 80 of the CGST Act, 2017.

The GST department opposed the petition and argued that filing returns is mandatory and the firm defaulted for a long period so cancellation was proper under Section 29(2). They also argued there was no violation of natural justice and bank attachment can be lifted only after payment or security.

Justice Robin Phukan observed that both sides agreed on a practical solution. The Court allowed the petitioners to file an application for revocation of GST cancellation, then file returns, and also file an application under Section 80 for installment payment. The Court directed that once these applications are filed, bank accounts should be defreezed, but only after the petitioners give sufficient security under Rule 159(5).

The court gave one week time to file the applications and directed the authorities to decide it within two weeks. The writ petition was closed.

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