Recently, the Gauhati High Court held that the restoration of a GST registration must be considered if the registered person complies with the requirements under the proviso to Rule 22(4) of the CGST Rules, 2017. The Court clarified that when a person, whose registration was cancelled for non-filing of returns, expresses readiness to furnish all pending returns and discharge the entire tax liability along with applicable interest and late fees, the competent officer has the authority to drop the cancellation proceedings and restore the registration by passing an order in Form GST REG-20. This ruling underscores the Court’s emphasis on enabling genuine assessees to regularise their compliance rather than being permanently shut out for procedural defaults.
Brief Facts:
The petitioner, carrying on business under the name M/s Aruhan Enterprise as a sole proprietorship, was registered under both the CGST Act, 2017, and the AGST Act, 2017. Due to non-filing of GST returns for a continuous period of six months, she was issued a show cause notice under Section 29(2)(c) of the CGST Act, directing her to reply within 30 days. The notice warned that failure to respond or appear for a hearing would result in an ex parte decision.
The petitioner neither replied nor appeared, leading to an order cancelling her GST registration. Subsequently, she filed the present writ petition seeking revocation of the cancellation order. She explained that her non-response stemmed from difficulty navigating the online GST portal, compounded by disruptions caused by the COVID-19 pandemic. After recovering, she filed all pending returns up to May 2023 as permitted by the GST portal, and discharged her outstanding tax liability along with applicable interest and late fees. She also expressed readiness to comply fully with the requirements of the proviso to Rule 22(4) of the CGST Rules, 2017.
Contentions of the Petitioner:
The petitioner’s counsel submitted that her failure to respond to the show cause notice was not deliberate but due to limited technical familiarity with the GST portal, compounded by challenges during the COVID-19 pandemic, which hindered timely access and reply. It was contended that the petitioner has since filed all pending GST returns up to May 2023 and paid the entire outstanding tax, interest, and late fees, thereby clearing all arrears. Counsel further emphasised that she is now ready to comply with all procedural requirements under the proviso to Rule 22(4) of the CGST Rules, 2017, which permits restoration of GST registration upon full payment and demonstrated compliance.
Observations of the Court:
Justice Sanjay Kumar Medhi examined the scope of the proviso to sub-rule (4) of Rule 22 of the CGST Rules, 2017, noting, “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".
The Court stressed that the object of the law is not to permanently exclude a taxpayer from the GST system for procedural lapses if they are willing to regularise their compliance. The proviso empowers the officer to drop proceedings and restore registration when the taxpayer meets the prescribed conditions.
In the present case, the Court observed that the petitioner had already updated her returns, paid all dues, and expressed readiness to fulfil any remaining procedural requirements. Therefore, if she submitted an application fulfilling the criteria under the proviso to Rule 22(4), the competent authority would be bound to consider it in accordance with law.
The decision of the Court:
Directing the petitioner to file the necessary application under Rule 22(4), the Court ordered that upon compliance, the authority shall duly consider the request for restoration of GST registration and pass an appropriate order. The writ petition was accordingly disposed of.
Case Title: Shahima Khatun v. The State of Assam
Coram: Justice Sanjay Kumar Medhi
Case No.: WP(C)/3300/2025
For the Petitioner: Mr. A.K. Gupta, Mr. R.K. Mahanta, Ms. M. Nirola, Mr. R.S. Mishra
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