Case Law Details
Nit Traders And Anr Vs Union of India (Gauhati High Court)
The writ petition was filed challenging the cancellation of GST registration of the petitioners under Section 29(2)(c) of the Central Goods and Services Tax (CGST) Act, 2017. The petitioners, a registered proprietorship firm, had failed to file GST returns for a continuous period of six months, leading to the issuance of a show cause notice dated 16.09.2024. The notice required a reply within 30 days and warned that failure to respond or appear for a hearing would result in an ex parte decision. Subsequently, an order dated 08.11.2024 was passed cancelling the GST registration due to non-filing of returns.
The petitioners contended that they could not respond to the show cause notice in time due to lack of familiarity with online procedures and financial losses incurred in a government project. They stated that by the time they became aware of the notice, the deadline for reply and hearing had expired and the cancellation order had already been uploaded. They approached the High Court seeking relief and expressed willingness to comply with statutory requirements, including filing pending returns and paying dues as per the proviso to Rule 22(4) of the CGST Rules, 2017.
The Court examined the statutory framework governing cancellation of GST registration. Under Section 29(2)(c), registration may be cancelled if a registered person fails to furnish returns for a continuous period of six months. Rule 22 of the CGST Rules lays down the procedure for cancellation, including issuance of a show cause notice and an opportunity to respond. Importantly, the proviso to Rule 22(4) provides that if a person furnishes all pending returns and pays the tax dues along with applicable interest and late fees, the proper officer may drop the cancellation proceedings and pass an order restoring registration.
The Court observed that cancellation of GST registration entails serious civil consequences. It noted that the statutory scheme itself provides a mechanism for relief where the taxpayer is willing to regularize compliance by filing returns and clearing dues. In such circumstances, the proper officer has the authority to drop the proceedings and restore registration in accordance with the prescribed procedure.
Although the respondents raised an objection regarding delay and argued that a prior similar order should not be treated as precedent, the Court did not deny relief on this ground. Instead, it focused on the statutory provisions and the petitioners’ willingness to comply with requirements.
Accordingly, the Court disposed of the writ petition with directions. It allowed the petitioners to approach the concerned authority within two months from the date of the order for restoration of GST registration. Upon such application, if the petitioners furnish all pending returns and pay the tax dues along with applicable interest and late fees, the authority is required to consider the application and pass appropriate orders in accordance with law. The process is to be completed expeditiously, preferably within 60 days from receipt of the certified copy of the order.
The Court further clarified that the limitation period under Section 73(10) of the CGST Act/State GST Act shall be computed from the date of the present order, except for the financial year 2025–26, which would be governed by Section 44 of the Act. The petitioners would also remain liable to pay all arrears, including tax, interest, penalty, and late fees.
Finally, the Court expressly stated that the present order should not be treated as a precedent.
FULL TEXT OF THE JUDGMENT/ORDER OF GUWAHATI HIGH COURT
Heard Ms. N. Hawelia, learned counsel for the petitioners and Dr. B. N. Gogoi, learned Standing Counsel, CGST for the respondent nos. 2 & 3 Also heard Ms. R. Dutta, learned counsel appearing on instructions of Shri S. K. Medhi, learned C.G.C. for the Union of India.
2. As per the facts projected, the petitioner no. 1 is a proprietorship business under the name & style, “M/S NIT Traders” with the petitioner no. 2. It is an Assesee registered under the Central Goods and Services Tax (CGST) Act, 2017 bearing registration No. 18ACBPB4360P2ZH. On the reason of non-filing of GST returns for a continuous period of six months, the petitioners were served with a show cause notice bearing reference No.ZA180924014551L, dated 16.09.2024 asking 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 petitioners fail to furnish a reply within the stipulated date or fail 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 08.11.2024 was passed by the Superintendent of Taxes, Tezpur, Range-I, Assam whereby the petitioner’s GST registration has been cancelled for not furnishing returns for a continuous period of 6 (six) or more months.
3. The learned counsel for the petitioners submits that due to non-conversant of online procedure and also for the loss sustained in a work under the Public Health Engineering Department, the petitioner no. 2 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 petitioners 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.
4. Being aggrieved, the petitioners have approached this Court by filing the present writ petition.
5. Hawelia, learned counsel for the petitioners has submitted that the petitioners are ready and willing to comply with all the formalities required as per proviso to sub-rule (4) of Rule 22 of the CGST Rules, 2017.
6. 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. The said Rule is extracted herein below:
“Rule 22 : Cancellation of Registration (1) Where the proper officer has reasons to believe that the registration of a person is liable to be cancelled under Section 29, he shall issue a notice to such person in FORM GST REG-17, requiring him to show cause, within a period of seven working days from the date of the service of such notice, as to why his registration shall not be cancelled.
(2) The reply to the show cause notice issued under sub-rule [1] shall be furnished in FORM REG-18 within the period specified in the said sub-rule.
(3) Where a person who has submitted an application for cancellation of his registration is no longer liable to be registered or his registration is liable to be cancelled, the proper officer shall issue an order in FORM GST REG-19, within a period of thirty days from the date of application submitted under Rule 20 or, as the case may be, the date of the reply to the show cause issued under sub-rule (1), (or under sub-rule (2A) of Rule 21A) cancel the registration, with effect from a date to be determined by him and notify the taxable person, directing him to pay arrears of any tax, interest or penalty including the amount liable to be paid under subsection (5) of Section 29.
(4) Where the reply furnished under sub-rule (2) (or in response to the notice issued under sub-rule (2A) of Rule 21A) is found to be satisfactory, the proper officer shall drop the proceedings and pass an order in FORM GST REG-20 : Provided that where the person instead of replying to the notice served under sub rule (1) for contravention of the provisions contained in Clause (b) or Clause (c) of sub-section (2) of section 29, furnishes all the pending returns and makes full payment of the tax dues along with applicable interest and late fee, the proper officer shall drop the proceedings and pass an order in FORM GST REG-20. (5) The provisions of sub-rule (3) shall, mutatis mutandis, apply to the legal heirs of a deceased proprietor, as if the application had been submitted by the proprietor himself.”
7. 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.
8. The learned counsel for the petitioners has also referred to an order dated 18.07.2025 passed in WP(C) No. 3926/2025 (Dipjyoti Borah Vs. The State of Assam & 2 Ors.) wherein the petitioner therein was similarly situated like the present petitioners.
9. Dr. Gogoi, learned Standing Counsel has, however, raised an objection on the ground of delay and has submitted that though the petitioner is relying upon the aforesaid order dated 18.07.2025, the present order may not be treated to be a precedent.
10. Having regard to the fact 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 petitioners 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, this Court is of the considered view that in the event the petitioners approach 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.
11. In such view of the matter, this writ petition is disposed of by providing that the petitioners shall approach the concerned authority within a period of (two) months from today seeking restoration of her GST registration. If the petitioners submit 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 petitioners 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.
12. It is needless to say that the period as stipulated under Section 73 (10) of the Central GST Act/State GST Act shall be computed from the date of the instant order, except for the financial year 2025-26, which shall be as per Section 44 of the Central GST Act/State GST Act. The petitioners herein also be liable to make payment of arrears i.e. tax, penalty, interest and late fees.
13. The writ petition accordingly stands disposed of.
14. It is made clear that the present order may not be treated to be a precedent.
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