Dhirghat Hardware Stores And Anr vs. The Union Of INDIA And 3 Ors

Held

The Court held that the cancellation of GST registration entails serious civil consequences. Referring to Section 29(2)(c) of the CGST Act and the proviso to sub-rule (4) of Rule 22 of the CGST Rules, 2017, the Court observed that if a person served with a show cause notice for non-furnishing of returns for six months is willing to furnish all pending returns and make full payment of tax dues along with applicable interest and late fee, the officer can drop the proceedings. The Court noted that the petitioner had updated all pending returns and discharged all GST dues, late fees, and interest. Therefore, the Court directed the petitioner to approach the concerned authority within two months from the date of the order seeking restoration of GST registration, by complying with the requirements of the proviso to Rule 22(4). The concerned authority was directed to consider the application for restoration in accordance with law and take necessary steps expeditiously. The Court also clarified that the period stipulated under Section 73(10) of the CGST/SGST Act would be computed from the date of the instant order, except for the financial year 2024-25, which would be as per Section 44. The petitioner would be liable to pay arrears of tax, penalty, interest, and late fees.

Facts

The petitioner, M/s Dhirghat Hardware Stores, represented by its sole proprietor, Mainur Islam, is registered under the CGST Act, 2017. Due to non-filing of GST returns for six months, the petitioner received a show cause notice dated 15.01.2023. The petitioner, not being conversant with online procedures, failed to reply within the stipulated period. Consequently, the Superintendent, Central Goods and Services Tax, Dhubri-1, passed an order dated 22.03.2023 cancelling the petitioner's GST registration without assigning any reason. An appeal filed by the petitioner was dismissed on 09.10.2025. The petitioner subsequently updated all pending returns up to March 2023 and paid dues, late fees, and interest. However, an application for revocation of cancellation could not be filed as the 270-day time limit had expired.

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 six months, without assigning reasons in the order, is valid, particularly when the proviso to Rule 22(4) of the CGST Rules, 2017, allows for dropping proceedings upon furnishing pending returns and making full payment of dues, interest, and late fees? Petitioner's arguments: The petitioner contended that due to a lack of familiarity with online procedures, they could not file a reply to the show cause notice. They have since rectified all pending returns and paid all dues, interest, and late fees. They also argued that the cancellation of registration entails serious civil consequences and that the proviso to Rule 22(4) should be considered. Revenue's arguments: The judgment does not record specific arguments made by the revenue or state. However, the revenue's actions, as reflected in the dismissal of the appeal and the initial cancellation order, indicate reliance on the provisions of Section 29(2)(c) and Rule 22 of the CGST Rules.