GST Registration Cancellation Reversed by Gauhati High Court — NIT Traders Case Analysis
Case Overview
Case Name: Nit Traders And Anr Vs Union of India
Court: Gauhati High Court
Relevant Provisions: Section 29(2)(c) of the Central Goods and Services Tax (CGST) Act, 2017; Rule 22 of the CGST Rules, 2017
This significant ruling by the Gauhati High Court offers critical guidance to assessees whose GST registrations have been cancelled on account of prolonged non-filing of returns. The Court, while disposing of the writ petition, carved out a path for restoration of GST registration provided the assessee demonstrates genuine willingness to fulfill all pending statutory obligations.
Background and Facts of the Case
M/S NIT Traders, a registered proprietorship firm, held GST registration bearing No. 18ACBPB4360P2ZH under the CGST Act, 2017. The firm failed to file GST returns for a continuous period exceeding six months, which triggered action by the tax authorities.
Show Cause Notice and Cancellation Order
- A show cause notice bearing reference No. ZA180924014551L was issued on 16.09.2024, calling upon the assessee to submit a reply within 30 days from the date of service.
- The notice explicitly warned that non-response or failure to attend the personal hearing would result in an ex parte decision based on available records.
- No reply was furnished within the stipulated timeframe, nor did the assessee appear before the authority.
- Consequently, the Superintendent of Taxes, Tezpur, Range-I, Assam passed an order dated 08.11.2024, cancelling the GST registration of the firm under
Section 29(2)(c)of the CGST Act, 2017.
Assessee's Explanation for Default
The assessee offered the following explanations for non-compliance:
- Unfamiliarity with online procedures: The proprietor was not conversant with the GST portal and online filing mechanisms.
- Financial hardship: The firm had incurred significant losses arising out of work executed under the Public Health Engineering Department, which adversely affected its operational capacity.
- By the time the proprietor became aware of the show cause notice, the deadline for filing a reply had already lapsed, the personal hearing date had passed, and the cancellation order had already been uploaded on the portal.
The petitioners thereafter approached the Gauhati High Court by way of a writ petition, seeking relief against the cancellation order and expressing unconditional willingness to comply with all pending statutory requirements.
Statutory Framework: Cancellation of GST Registration
Section 29(2)(c) — Grounds for Cancellation
Under Section 29(2)(c) of the CGST Act, 2017, a duly empowered officer is authorized to cancel the GST registration of a person from such date — including any retrospective date — as he considers appropriate, where the registered person has not furnished returns for a continuous period of six months.
Rule 22 — Procedure for Cancellation
Rule 22 of the CGST Rules, 2017 prescribes the procedural steps that must be followed before cancellation is effectuated. The Court reproduced the full text of Rule 22, which is extracted below: