Basudev Karmakar Vs Superintendent of CGST & CX (Calcutta High Court)
Summary: Calcutta High Court set aside cancellation of the GST registration of the proprietor of M/s Eastern Security Services, whose registration had been cancelled on 22.10.2024 following non-filing of GSTR-3B and GSTR-1 returns for six months. The petitioner attributed the default to non-receipt of payments from clients and financial hardship, stated that substantial input tax credit was available, and expressed readiness to file all pending returns together with tax, interest, penalties and late fees. The petitioner also contended that no effective opportunity had been granted before cancellation and relied upon the second proviso to Rule 23 of the CGST Rules, 2017.
Following the Division Bench decision in Subhankar Golder Vs Assistant Commissioner of State Tax, Serampore Charge & Ors. and Subhendu Dutta Vs Union of India, the Court observed that cancellation of GST registration carries severe civil consequences because it disables an assessee from carrying on business and therefore warrants a liberal and pragmatic approach. The Court held that where cancellation is attributable to non-filing of returns, an opportunity should be afforded to file the returns and discharge the dues. It accordingly set aside the cancellation order and directed the petitioner to file all pending GSTR-3B and GSTR-1 returns within six weeks from receipt of the server copy along with tax, interest, penalty and late fees. The authorities were directed to open the GST portal within two weeks and, upon compliance, restore registration within three working days. Failure to comply would result in automatic dismissal of the writ petition.
Cases Discussed
- Subhankar Golder Vs Assistant Commissioner of State Tax, Serampore Charge & Ors., MAT 639 of 2024 (Calcutta High Court) — Division Bench judgment followed as binding authority for granting an assessee whose GST registration was cancelled for non-filing an opportunity to file pending returns and pay the dues.
- Subhendu Dutta Vs Union of India, [2026] 188 taxmann.com 1058 (Calcutta High Court) — Followed for setting aside cancellation subject to filing pending returns within the prescribed period and enabling filing through reopening of the GST portal.
FULL TEXT OF THE JUDGMENT/ORDER OF CALCUTTA HIGH COURT
1. Affidavit-of-service filed in court today be kept with the record.
2. The petitioner is the proprietor of M/s. Eastern Security Services. A show-cause notice under Form REG 17 was issued for non-filing of GSTR-3B and GSTR-1 for six months. Thereafter order of cancellation dated 22.10.2024 was passed.
3. Petitioner states that due to non-receipt of payment from clients and financial hardships, return could not be filed. The petitioner has substantial input tax credit.
4. It is further submitted that no effective opportunity was granted before cancellation. Such non-filing is curable.
5. The petitioner is ready to file all pending return with tax, interest, penalties and late fees. It is further submitted that as per second proviso of Rule 23 CGST Rules, 2017 no revocation application is required if returns are filed.
6. Learned counsel appearing for the petitioner places reliance upon a Division Bench judgement in the case of Subhankar Golder –Vs.- Assistant Commissioner of State Tax, Serampore Charge & Ors. (MAT 639 of 2024)and Subhendu Dutta –Vs.- Union of India reported in [2026] 188 taxmann.com 1058 (Calcutta) where cancellation was set aside subject to the filing of return within six weeks with a direction to the respondent to reopen GST portal to enable such filing.
7. Learned counsel appearing for the respondents submits that cancellation of the registration of the petitioner under Section 29(2)(c) is valid due to continuous non-filing of returns.
8. The statutory remedy for revocation under Section 30 read with Rule 23 was available but not availed.
9. Opening of portal is subject to proper procedure.
10. Having heard the parties and upon perusing the matters available on record this Court is of the view that the petitioner has been able to make out a prima facie case warranting an interference at this stage.
11. This Court has taken a judicial note that cancellation of GST registration has severe civil consequences. It disables the assessee from business. Hence a liberal and pragmatic approach is required.
12. This Court is bound by the Division Bench judgement Subhankar Golder –Vs.- Assistant Commissioner of State Tax, Serampore Charge & Ors. (MAT 639 of 2024) (supra) and Subhendu Dutta –Vs.- Union of India reported in [2026] 188 taxmann.com 1058 (Calcutta)(supra).
13. The said judgement holds that where the cancellation is for non-filing the assessee should be given one opportunity to file return and pay dues.
14. The second proviso to Rule 23(1) of the CGST Rules also supports restoration upon filing of return and payment of dues without insisting a separate revocation application. Revenue interest is protected by recovery of tax/interest/penalty. Business interest is protected by restoration.
15. In view of the above and also following the Division Bench judgement this writ petition is allowed with the following directions:-
a. The impugned order of cancellation of restoration dated 22.10.2024 is set aside. The petitioner shall file all pending GSTR 3B and GSTR 1 returns for the period of default within six weeks from receipt of server copy, along with payment of tax, interest, penalty and late fees.
b. The respondent shall open the GST portal within two weeks from communication of server copy of this order to enable the petitioner to file pending returns.
c. Upon compliance, the jurisdictional officer shall restore the GST registration of the petitioner within three working days.
d. Benefit of this order shall not enure to the petitioner and the writ petition shall automatically stand dismissed without further reference to this Court.
16. All parties are to act on the server copy of this order duly downloaded from the official website of Calcutta High Court.
