GST Restoration allowable on compliance with Rule 22(4) of CGST Rules: Gauhati HC [Read Order]

The Gauhati High Court has held that Goods and Service Tax (GST) restoration allowable when the assessee has made compliance with Rule 22(4) of CGST Rules, 2017. It was viewed that “f a person, who has been served with a show cause notice under Section 29(2)(c) of the CGST Act, 2017, 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.”

Vedanta Talukdar, the petitioner that he has been carrying out his proprietorship business under the name & style, “M/S Vedanta Talukdar” as the sole proprietor. He is an Assesee registered under the Central Goods and Services Tax (CGST) Act, 2017/Assam Goods and Services Tax (AGST) Act, 2017 bearing registration No. 18ACZPT1298G1ZO. On the reason of non-filing of GST returns for a continuous period of six months.

The petitioner was served with a show cause notice bearing reference No. ZA180722001787F dated 02.07.2022 asking him to furnish reply to the aforesaid notice within a period of 30 (thirty) days from the date of service of notice and it was mentioned in the aforesaid show cause 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. Thereafter, the impugned order dated 16.07.2022 was passed by the Assistant Commissioner of State Tax, Guwahati-C-8 whereby the petitioner’s GST registration has been cancelled without assigning any reason.

The counsel for the petitioner submitted that due to the loss sustained during Covid-19, he could not visit the GST portal and accordingly 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.

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The petitioner further contends that after recovering from impact of Covid-19, he updated all his pending returns up to the month of July, 2022 as allowed by the GST portal and while updating his returns, the petitioner has also discharged all his GST dues along with his 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.”

Shri 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 Subrule (4) of Rule 22 of the CGST Rules, 2017.

As per Section 29(2)(c), 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 CGST Rules 2017 that if a person, who has been served with a show cause notice under Section 29(2)(c) of the CGST Act, 2017, 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.

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A single bench of Justice Sanjay Kumar Medhi observed that the GST registration of the petitioner has been cancelled under Section 29(2)(c) of the CGST Act, 2017 for the reason that the petitioner did not submit returns for a period of 6 (six) months or more and the provisions contained in the proviso to sub-rule (4) of Rule 22 of the CGST Rules, 2017 and cancellation of registration entails serious civil consequences.

The court 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, has the authority and jurisdiction to drop the proceedings and pass an 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 his GST registration. If the petitioner submits such an application and complies with all the requirements as provided in the proviso to sub-rule (4) of Rule 22 of the CGST Rules, 2017, the concerned authority shall consider the application of the petitioner for restoration of the GST registration and passed necessary orders in accordance with law. The aforesaid process be completed expeditiously and preferably within an outer limit of 60 days from the date of receipt of the certified copy of this order.

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