M/S Gauri Shankar Binod Kumar vs. The State Of Assam And 3 Ors.

Held

The Court held that the cancellation of GST registration under Section 29(2)(c) of the Assam Goods and Services Tax Act, 2017, for non-furnishing of returns for a continuous period of six months, can be considered for restoration if the petitioner complies with the proviso to Rule 22(4) of the Central Goods and Services Tax Rules, 2017. The Court reasoned that the proviso allows for dropping proceedings if pending returns are furnished and full payment of tax dues, along with applicable interest and late fees, is made. Given that cancellation of registration carries serious civil consequences, the Court found it appropriate to provide an opportunity for restoration. The ratio decidendi is that procedural lapses in responding to notices, when coupled with a willingness to rectify the underlying non-compliance (filing returns and paying dues), should not necessarily lead to irreversible cancellation of registration, especially when a statutory mechanism for such rectification exists. The Court directed the petitioner to approach the concerned authority within two months with an application for restoration, complying with all requirements of the proviso to Rule 22(4). The authority was directed to consider the application and pass necessary orders. The petitioner is liable to pay all arrears, including tax, penalty, interest, and late fee.

Facts

The petitioner, M/s Gauri Shankar Binod Kumar, a proprietorship firm dealing in cotton wholesale and retail, had its GST registration cancelled by the Assistant Commissioner of State Taxes on December 18, 2024, under Section 29 of the Assam Goods and Services Tax Act, 2017, read with Rule 22 of the Assam Goods and Services Tax Rules, 2017. The cancellation was based on the failure to furnish returns for a continuous period. The petitioner's subsequent application for restoration of registration, filed on January 30, 2025, was rejected by the Special Commissioner of State Taxes on March 12, 2025, citing the lapse of the prescribed limitation period. The petitioner contended that the failure to file replies to show-cause notices was due to oversight and that it had subsequently filed pending returns and paid taxes. The petitioner approached the High Court challenging both the cancellation order and the rejection of the restoration application.

Key Issues

1. Whether the cancellation of GST registration under Section 29(2)(c) of the Assam Goods and Services Tax Act, 2017, for non-furnishing of returns for a continuous period of six months, can be set aside or modified in light of the proviso to Rule 22(4) of the Central Goods and Services Tax Rules, 2017? Petitioner's arguments: The petitioner argued that it was ready and willing to comply with the requirements of the proviso to Rule 22(4) of the Central Goods and Services Tax Rules, 2017, which allows for dropping proceedings if pending returns are furnished and tax dues, along with interest and late fees, are paid. The petitioner contended that its failure to file replies to show-cause notices was due to oversight and that it had subsequently filed all due returns and paid taxes. The petitioner relied on the fact that cancellation of registration entails serious civil consequences. Revenue's arguments: The judgment does not explicitly record arguments made by the revenue or state. However, the orders under challenge were passed by the revenue authorities, indicating their stance was to uphold the cancellation and rejection of restoration based on procedural grounds.