Restoration of GST Registration

Source: Gauhati High Court 

Why in News? 

The single judge bench of Justice Kardak Ete in the case of Shri Pankaj Mohan v. The Union of India & Anr. (2025) allowed a writ petition seeking restoration of Goods and Services Tax (GST) registration which had been cancelled due to non-filing of returns for a continuous period of six months. 

What was the Background of Shri Pankaj Mohan v. The Union of India & Anr. (2025) Case? 

• The petition was filed by a proprietor engaged in execution of works contracts whose GST registration had been cancelled by the GST authorities. 
• The GST authorities cancelled the registration after issuance of a show cause notice alleging continuous default in filing returns for six months. 
• The petitioner submitted that the failure to file returns was not deliberate and occurred due to lack of familiarity with the GST online portal and miscommunication with his tax consultant. 
• By the time the show cause notice was received by the petitioner, the window for filing reply and attending personal hearing had already expired. 
• The petitioner informed the Court that all pending returns up to October–December 2024 had since been filed. 
• The petitioner had also duly paid all applicable taxes along with the pending returns. 
• The GST Department did not oppose the grant of relief to the petitioner. 
• The Department agreed that the issue was covered by earlier decisions of the Gauhati High Court in similar matters. 

What were the Court's Observations? 

• The Court noted that under Section 29(2)(c) of the Central Goods and Services Tax Act, 2017 (CGST Act) read with Rule 22 of the CGST Rules, the authorities are empowered to drop cancellation proceedings if pending returns are filed along with payment of tax, interest and late fee. 
• The Bench emphasized that cancellation of GST registration carries serious civil consequences and should not be continued where the taxpayer is willing to regularise defaults. 
• The Bench observed that cancellation of registration affects the fundamental right to carry on business. 
• The Court held that even where the statutory period for filing revocation has expired, constitutional relief can be granted to enable restoration upon full compliance. 
• The Court directed that the petitioner may approach the concerned GST authority within 60 days seeking restoration of the cancelled registration. 
• The authority was directed to consider the application and restore the registration expeditiously, subject to compliance with the proviso to Rule 22(4) of the CGST Rules. 
• The restoration was made conditional upon payment of all arrears, interest and late fees by the petitioner. 
• In view of the above observations, the Bench allowed the writ petition of the petitioner. 

What is GST Registration and its Cancellation? 

About GST Registration: 

• GST (Goods and Services Tax) registration is a mandatory requirement for businesses engaged in supply of goods or services above prescribed threshold limits. 
• Registration enables businesses to collect tax from customers and claim input tax credit on purchases. 
• GST registration is governed by the Central Goods and Services Tax Act, 2017 (CGST Act) and corresponding State GST Acts. 
• The registration process is conducted through the GST online portal maintained by the GST Network. 
• Registered taxpayers are required to file periodic returns declaring their sales, purchases and tax liability. 

Cancellation of GST Registration: 

• Under Section 29 of the CGST Act, GST registration can be cancelled on various grounds including non-filing of returns for a continuous period of six months. 
• The cancellation process begins with issuance of a show cause notice to the registered person. 
• The taxpayer is given an opportunity to respond to the show cause notice and attend a personal hearing. 
• If the explanation is not satisfactory or no response is received, the registration may be cancelled by the proper officer. 
• Cancellation of GST registration has serious civil consequences as it affects the right to carry on business and collect tax from customers. 
• A person whose registration is cancelled cannot issue tax invoices or claim input tax credit. 

Restoration of Cancelled GST Registration: 

• Rule 22 of the CGST Rules provides for revocation of cancellation of registration. 
• Under Rule 22(4), a person can apply for revocation within 30 days from the date of service of the cancellation order. 
• The authorities may drop cancellation proceedings if pending returns are filed along with payment of tax, interest and late fee. 
• Even where the statutory period for filing revocation has expired, courts can grant constitutional relief under Article 226 of the Constitution. 
• Courts recognize that cancellation affects fundamental rights and are willing to grant relief where the taxpayer demonstrates willingness to comply with all requirements.