Restaurant Owner Entitled to Restoration of GST Registration After Clearance of Entire Tax Dues: Bombay HC [Read Order]

In a recent ruling, the Bombay High Court allowed a writ petition filed by a restaurant owner seeking restoration of his cancelled Goods and Services Tax (GST) registration after clearing all tax dues.

Kishore Nichani - the petitioner, owned premises from which a restaurant and bar were operated through a conducting arrangement. He was granted GST registration under the CGST Act, 2017.

Due to serious illness and long medical rest, he failed to file GST returns for several months. On this ground, the GST authorities issued a show cause notice and cancelled his registration retrospectively for non-filing of returns.

The petitioner later cleared the dues and applied for revocation, which was allowed and the registration was restored. However, after some time, another show cause notice was issued and the registration was again cancelled retrospectively. The petitioner argued that this cancellation was done without giving proper opportunity of hearing, which was against Section 29 of the CGST Act.

Later, search proceedings were conducted and notices were issued under Section 74 of the CGST Act. The petitioner cooperated with the department and made voluntary payment of tax, interest and penalty. An order in Form DRC-23 was passed confirming that all government dues stood cleared and provisional attachment was lifted.

After clearing all dues, the petitioner applied for restoration of GST registration under Section 30 read with Rule 23 of the CGST Rules. As no action was taken, he approached the High Court.

The petitioner’s counsel argued that once all dues are paid, the authorities are required to restore the registration. They explained that continued cancellation causes serious civil consequences and stops business activity, while it does not benefit the revenue.

The Division Bench of Justice G.S. Kulkarni and Justice Aarti Sathe observed that cancellation of GST registration has adverse civil consequences and the law clearly provides for revocation after dues are cleared.

The court pointed out that keeping the registration cancelled does not enure to the benefit of the revenue when no dues are pending. The court explained that the tax officer had not acted in consonance with Section 30 and Rule 23, despite admitting that there was no outstanding liability.

The court held that the restaurant owner was entitled to restoration of GST registration and allowed the writ petition, with no order as to costs.

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