Guwahati High Court Quashes GST Cancellation Order: Directs Assessee to Clear Pending Returns Within 30 Days

In a significant relief to non-compliant business entities facing registration cancellation, the Guwahati High Court has intervened to restore the Goods and Services Tax (GST) registration of an assessee. The High Court, in the matter of Choudhury Tea And Agro Industries Pvt Ltd Vs Union of India And Ors, set aside the cancellation order issued by the revenue department. The Court has granted the assessee a window of 30 days to file all pending returns, subject to the payment of applicable taxes, interest, and penalties.

This ruling underscores the judiciary's approach to balancing strict tax compliance with the need to allow businesses to rectify procedural lapses, provided the revenue interest is protected. The judgment relies heavily on the precedent set by the case of Motaleb Bhuyan vs The State of Assam and Ors.

Factual Matrix of the Case

The petitioner, Choudhury Tea And Agro Industries Pvt Ltd, is a corporate entity registered under the Companies Act 2013. The company held a valid registration under the Central Goods and Service Tax Act, 2017 (CGST Act) and possessed a GSTIN Unique ID.

The dispute arose due to the non-compliance of the assessee regarding the filing of statutory returns. As per the records, the assessee had failed to submit returns as mandated under Section 39 of the CGST Act of 2017. Consequently, the tax authorities initiated proceedings against the company.

The Show Cause Notice and Cancellation

The revenue department issued a Show Cause Notice (SCN) dated 02.09.2021. This notice called upon the assessee to explain why their GST registration should not be cancelled due to the failure to file returns. Furthermore, the notice intimated that the registration stood suspended with effect from the date of the notice itself, i.e., 02.09.2021.

There was a divergence in the facts presented regarding the response to this SCN:

  • Assessee’s Contention: The petitioner claimed that they never received the SCN and, consequently, did not file any reply.
  • Revenue’s Record: The cancellation order dated 07.10.2021 recorded that a reply dated 03.10.2021 had been received from the assessee but was found to be unsatisfactory.

Ultimately, the proper officer cancelled the registration via the order dated 07.10.2021, citing the non-filing of due returns commencing from October 2020.