Rajesh Kalita vs. The State Of Assam And 3 Ors

Held

The Court held that cancellation of GST registration entails serious civil consequences. It observed that the proviso to sub-rule (4) of Rule 22 of the CGST Rules, 2017, allows for dropping proceedings if a person served with a show cause notice under Section 29(2)(c) furnishes all pending returns and makes full payment of tax dues, including applicable interest and late fees. The Court found that the petitioner's situation was similar to a case previously decided by the High Court (Sanjoy Nath vs. The Union of India and others). Therefore, the Court directed the petitioner to approach the concerned authority within two months from the date of the judgment seeking restoration of his GST registration. If the petitioner complies with all requirements as per the proviso to sub-rule (4) of Rule 22, the authority is directed to consider the application for restoration in accordance with law and take necessary steps expeditiously. The Court also noted that the petitioner would be liable to pay arrears of tax, penalty, interest, and late fees, and the period stipulated under Section 73(10) of the CGST/SGST Act would be computed from the date of the judgment, except for the financial year 2024-25.

Facts

The petitioner, Rajesh Kalita, proprietor of M/s B.R. Associates, had his GST registration cancelled by the Assistant Commissioner of State Tax, Guwahati-D-5, via an order dated 30.10.2024. This cancellation was due to non-filing of GST returns for a continuous period of six months or more. The petitioner received a show cause notice dated 24.02.2023, but claims he did not receive a notification for a personal hearing. He also stated he was not conversant with online procedures, leading to missed deadlines for replying to the notice and attending the hearing. Subsequently, he was unable to file an application for revocation of cancellation due to the elapsed time limit.

Key Issues

1. Whether the cancellation of GST registration under Section 29(2)(c) of the CGST Act, 2017, for non-furnishing of returns for a continuous period of six months, is sustainable when the petitioner claims to be willing to comply with the proviso to sub-rule (4) of Rule 22 of the CGST Rules, 2017? The petitioner argued that due to reasons beyond his control and his lack of familiarity with online procedures, he failed to submit returns. He contended that he is ready and willing to furnish all pending returns and make full payment of tax dues, along with applicable interest and late fees, as permitted by the proviso to sub-rule (4) of Rule 22 of the CGST Rules, 2017. The revenue (State of Assam and its authorities) did not record any specific arguments against this contention in the judgment.