GST Registration Cancellation: Gauhati HC Directs Department to Drop Proceedings if Taxpayer Furnishes Returns and Pays All Dues [Read Order]

The Gauhati High Court has held that GST (Goods and Services Tax) registration cancellation proceedings must be dropped when a taxpayer has furnished all pending returns and paid the requisite tax dues along with applicable interest and late fees.

The petitioner, Dipjyoti Boraha sole proprietor running his business under the name ‘Shri Dipjyoti Borah’, had approached the Court challenging the cancellation of his GST registration. The GST registration was cancelled by the Assistant Commissioner of State Tax, Guwahati, for failure to file returns for a continuous period of six months.

Although a show cause notice was duly issued, the petitioner explained that due to difficulties in navigating the online system and losses suffered during the Covid-19 pandemic, he could not submit his reply or attend the hearing in time. By the time he accessed the portal, the cancellation order had already been passed and uploaded online.

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Undeterred, the petitioner filed all his pending returns up to June 2022 and paid all outstanding tax dues, including applicable late fees and interest. However, his application for revocation of cancellation could not be processed as the statutory time limit for filing such an application had expired. Thus, the petitioner approached the High Court by way of a writ petition.

Justice Sanjay Kumar Medhi noted that under Rule 22(4) of the CGST Rules, 2017, read with Section 29(2)(c) of the CGST Act, an empowered officer must drop cancellation proceedings if a taxpayer furnishes all pending returns and clears all dues, interest, and late fees.

The bench relied on this provision and a similar precedent in Sanjoy Nath vs. Union of India, observed that the cancellation of GST registration carries severe civil consequences that should not be imposed when the taxpayer has remedied the default in accordance with law.

As a result, the High Court ordered the petitioner to submit an application for the restoration of his registration to the competent body within two months, making sure that all requirements under the applicable Rules were met.

The department has been instructed to consider the application and pass appropriate orders, preferably within 60 days of receiving the application.

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