Gauhati High Court allows restoration of cancelled GST registration on meeting Rule 22(4) conditions
Background of the dispute
The Gauhati High Court in Smt Jumoni Boruah Phukan Vs Union of India And 2 Ors examined the legality of cancellation of the assessee’s GST registration and the scope for restoration when the assessee is ready to clear all pending compliances.
The writ petition was filed against the order dated 25.04.2024 passed by the Superintendent, CGST, Golaghat I Range, cancelling the assessee’s GST registration bearing No. 18BBRPP2163G2ZA.
The assessee, a sole proprietor engaged in Works Contract Services and retail trade under the name Jumoni Boruah Phukan, held a valid registration under the Central Goods and Services Tax Act, 2017 and the Assam Goods and Services Tax Act, 2017. Her principal place of business was located at No. 2 Doigrung, Doigrung, NH 129, Doigrung, Chariali Daily Market, Near AGVB Bank, Pangkial Gaon, Golaghat, Assam.
Events leading to cancellation of GST registration
Show cause notice and suspension
- The jurisdictional officer issued a show cause notice dated 05.02.2024, alleging non-filing of GST returns for a continuous period of six months.
- The notice called upon the assessee to:
- Submit a reply within 30 days, and
- Appear for a personal hearing on 04.03.2024,
with a clear stipulation that failure to respond would result in ex parte decision.
- Simultaneously, the assessee’s GST registration was suspended with effect from 05.02.2024.
Cancellation order
Subsequently, on 25.04.2024, the Superintendent cancelled the assessee’s GST registration. The order recorded the cancellation but did not set out detailed reasons for doing so.
The assessee contended that the cancellation flowed from the alleged default in filing returns for six consecutive months as referred to in the show cause notice.
Assessee’s explanation and subsequent compliance
Reason for default
The assessee submitted before the High Court that:
- She had been facing severe financial distress,
- Due to this hardship, she could not file the required GST returns within time, and
- The non-filing was thus not deliberate but a consequence of genuine economic constraints.
Attempt for revocation and expiry of limitation
The assessee further stated that:
- She tried to file an application for revocation of cancellation of registration,
- However, by the time she attempted this, the statutory time limit for filing such an application had already lapsed, and
- Consequently, the electronic portal did not permit filing of the revocation request within the normal prescribed period.
Regularisation of returns
The assessee placed on record that she had since:
- Filed all pending GST returns up to April 2024, and
- Rectified the earlier defaults in return filing.
She also expressed readiness to make full payment of:
- All outstanding tax dues,
- Applicable interest,
- Penalties, and
- Late fees,
as required under the proviso to Rule 22(4) of the CGST Rules, 2017.
Legal provisions involved
Cancellation of registration under Section 29(2)(c)
The Court referred to Section 29(2)(c) of the CGST Act, which authorises the proper officer to cancel registration where:
a registered person has not furnished returns for a continuous period of 6 (six) months.
The cancellation can be from such date, including a retrospective date, as the officer deems fit.