2025 (2) TMI 202 - HC - GST

Cancellation of petitioner s GST registration - non-furnishing of returns for a continuous period of six months - HELD THAT - 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. This 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 his GST registration in accordance with law and shall take necessary steps for restoration of GST registration of the petitioner as expeditiously as possible.

2023 (12) TMI 160 - HC

ISSUES PRESENTED and CONSIDERED

The primary issues considered by the Court were:

Whether the cancellation of the petitioner's GST registration under Section 29(2)(c) of the Central Goods and Services Tax (CGST) Act, 2017, due to non-furnishing of returns for a continuous period of six months or more, was justified.
Whether the petitioner could seek restoration of the GST registration by complying with the requirements prescribed under the CGST Rules, particularly the proviso to sub-rule (4) of Rule 22.

ISSUE-WISE DETAILED ANALYSIS

Issue 1: Justification of GST Registration Cancellation

Relevant Legal Framework and Precedents: Section 29(2)(c) of the CGST Act, 2017 allows for the cancellation of GST registration if a registered person fails to furnish returns for a continuous period of six months. Rule 22 of the CGST Rules, 2017 outlines the procedure for such cancellation.
Court's Interpretation and Reasoning: The Court noted that the petitioner was issued a show cause notice for not furnishing returns for the specified period, which is a valid ground for cancellation under the CGST Act. The Court acknowledged the procedural requirements of Rule 22, which were followed by the authorities.
Key Evidence and Findings: The petitioner failed to notice the show cause notice uploaded on the common portal, resulting in non-compliance. The cancellation order was passed after the petitioner did not respond to the notice.
Application of Law to Facts: The Court applied Section 29(2)(c) and Rule 22 to the facts, confirming that the cancellation was procedurally correct given the petitioner's non-compliance.
Treatment of Competing Arguments: The petitioner argued that the non-compliance was due to reasons beyond his control and expressed willingness to comply with the requirements for restoration. The Court considered this argument in the context of the proviso to Rule 22(4).
Conclusions: The Court concluded that the cancellation was justified under the CGST Act and Rules but noted the possibility of restoration if the petitioner complied with the necessary requirements.

Issue 2: Restoration of GST Registration

Relevant Legal Framework and Precedents: The proviso to sub-rule (4) of Rule 22 of the CGST Rules, 2017 allows for the dropping of cancellation proceedings if the person furnishes all pending returns and pays the tax dues along with applicable interest and late fees.
Court's Interpretation and Reasoning: The Court interpreted the proviso as providing a mechanism for restoration of registration if the petitioner complies with the specified requirements. The Court referred to a similar case, highlighting the consistency in legal interpretation.
Key Evidence and Findings: The Court noted the petitioner's readiness to comply with the requirements for restoration. The petitioner was directed to approach the concerned authority within two months to seek restoration.
Application of Law to Facts: The Court applied the proviso to Rule 22(4) to the petitioner's situation, allowing for the possibility of restoration upon compliance.
Treatment of Competing Arguments: The Court balanced the procedural correctness of the cancellation with the petitioner's willingness to rectify the non-compliance, providing a path for restoration.
Conclusions: The Court concluded that the petitioner could seek restoration of GST registration by complying with the requirements outlined in the proviso to Rule 22(4).

SIGNIFICANT HOLDINGS

Core Principles Established: The Court reinforced the principle that GST registration can be canceled for non-furnishing of returns as per Section 29(2)(c) of the CGST Act, 2017. However, it also established that restoration is possible if the taxpayer complies with the requirements under the CGST Rules.
Final Determinations on Each Issue: The Court upheld the cancellation of the GST registration but provided a pathway for restoration, contingent upon the petitioner's compliance with the prescribed requirements.

The Court disposed of the writ petition, directing the petitioner to approach the concerned authority within two months and comply with the requirements for restoration of GST registration. The authority is to consider the application for restoration in accordance with the law and take necessary steps for restoration as expeditiously as possible. No costs were awarded.

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