M/S R. K. Construction vs. The Union Of INDIA And 2 Ors.
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The petitioner, M/s R. K. Construction, had its GST registration cancelled by the Superintendent, Central Goods and Services Tax, Duliajan Range, vide an order dated 10.02.2021, due to non-filing of GST returns for a continuous period of six months. A show cause notice dated 05.01.2021 was issued. The petitioner claims to have updated returns up to February 2021 and attempted to file a revocation application, but the time limits for both revocation and appeal had elapsed. The petitioner failed to notice the show cause notice uploaded on the common portal despite exercising diligence. This writ petition was filed before the Gauhati High Court seeking restoration of GST registration.
Held
The Court held that the cancellation of GST registration entails serious civil consequences. It noted that the proviso to sub-rule (4) of Rule 22 of the CGST Rules, 2017, empowers the proper officer to drop proceedings and pass an order in FORM GST REG-20 if the person furnishes all pending returns and makes full payment of tax dues, along with applicable interest and late fee, even after being served with a show cause notice under Section 29(2)(c) of the CGST Act, 2017. The Court found that the petitioner's situation was similar to the one in the cited case of Sanjoy Nath. Therefore, the Court directed that the petitioner should approach the concerned authority within two months from the date of the order, seeking restoration of its GST registration. If the petitioner complies with all the requirements as per the proviso to sub-rule (4) of Rule 22 of the CGST Rules, 2017, the authority shall consider the application for restoration in accordance with law and take necessary steps expeditiously. The period stipulated under Section 73(10) of the Central/State Act shall be computed from the date of the judgment, except for the financial year 2024-25. The petitioner is also liable to pay arrears of tax, penalty, interest, and late fees.
Key Issues
1. Whether the petitioner, having failed to file GST returns for a continuous period of six months, is entitled to have its GST registration restored, considering the proviso to sub-rule (4) of Rule 22 of the CGST Rules, 2017? The petitioner argued that due to reasons beyond its control, it could not submit the required returns under Section 39(1) of the CGST Act, 2017. However, it is ready and willing to comply with the formalities stipulated in the proviso to sub-rule (4) of Rule 22 of the CGST Rules, 2017, which allows for dropping proceedings if pending returns are furnished and tax dues, along with interest and late fee, are paid. The petitioner also relied on a previous order in a similar case, W.P.(C) no. 6366/2023 (Sanjoy Nath vs. The Union of India and others). The respondent revenue authorities did not record any specific arguments against the petitioner's plea for restoration under the said proviso.
Sections Cited
Section 39(1), Section 29(2)(c), Rule 22(4), Rule 22, Section 73(10), Section 44
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Cause title — parties, addresses and appearances
O R D E R
2025
Heard Mr. R S Mishra, learned counsel for the petitioner and Mr. S.C. Keyal, learned Standing Counsel, CGST for all the respondents.
The petitioner is an Assessee registered under the provisions of the Assam Goods and Services Tax Act, 2017 bearing registration No. 18ABDFM6908M1ZS and due to non-filing of GST returns for a continuous period of six months, the petitioner was issued with show cause notice dated 05.01.2021. Thereafter, the GST registration of the petitioner was cancelled vide Order No. ZA180221054973J dated 10.02.2021. 3. Though the petitioner updated his return up to February, 2021 and tried to file revocation application, however, same could not be done as the time limit for filing revocation application was elapsed and in the meantime, the time to file appeal also elapsed. Accordingly, the present application is filed before this court.
The petitioner has averred that as the show cause notice was uploaded in the common portal, the petitioner despite exercise of his diligence, failed to notice the fact of uploading of the show cause notice in the common portal and as a result, he could not submit any reply to the show cause notice dated 05.01.2021. 5. Section 39(1) of the CGST Act, 2017 inter alia requires a registered person to furnish a return for every calendar month or part thereof, electronically, of inward and outward supplies of goods or services or both, input tax credit availed, tax payable, tax paid and such other particulars, in such form and manner, and within such time, as may be prescribed.
Mr. Mishra, learned counsel appearing for the petitioner has submitted that due to reasons beyond his control, the petitioner could not submit the returns required to be submitted under Section 39(1) of the CGST Act, 2017 for a period of about 6
Page No.# 3/5 [six] months or more. He has, however, submitted that the petitioner is ready and willing to comply with all the formalities required as per proviso to sub-rule (4) of Rule 22 of the CGST Rules, 2017. 7. As per Section 29(2)(c), an officer, duly empowered, may cancel the GST registration of a person from such date, including any retrospective date, as he deems fit, where any registered person, has not furnished returns for a continuous period of 6 (six) months. Rule 22 of the CGST Rules, 2017 has laid down the procedure for cancellation of the registration. For ready reference, Rule 22 of the CGST Rules, 2017 is quoted herein below in its entirety :- Rule 22 : Cancellation of Registration (1) Where the proper officer has reasons to believe that the registration of a person is liable to be cancelled under Section 29, he shall issue a notice to such person in FORM GST REG-17, requiring him to show cause, within a period of seven working days from the date of the service of such notice, as to why his registration shall not be cancelled. (2) The reply to the show cause notice issued under sub-rule (1) shall be furnished in FORM REG-18 within the period specified in the said sub-rule. (3) Where a person who has submitted an application for cancellation of his registration is no longer liable to be registered or his registration is liable to be cancelled, the proper officer shall issue an order in FORM GST REG-19, within a period of thirty days from the date of application submitted under Rule 20 or, as the case may be, the date of the reply to the show cause issued under sub-rule (1), (or under sub-rule (2A) of Rule 21A) cancel the registration, with effect from a date to be determined by him and notify the taxable person, directing him to pay arrears of any tax, interest or penalty including the amount liable to be paid under sub-section (5) of Section 29. (4) Where the reply furnished under sub-rule (2) [or in response to the notice issued under sub-rule (2A) of Rule 21A] is found to be satisfactory, the proper officer shall drop the proceedings and pass an order in FORM GST REG-20 : Provided that where
Page No.# 4/5 the person instead of replying to the notice served under sub-rule (1) for contravention of the provisions contained in Clause (b) or Clause (c) of sub-section (2) of section 29, furnishes all the pending returns and makes full payment of the tax dues along with applicable interest and late fee, the proper officer shall drop the proceedings and pass an order in FORM GST REG-20. (5) The provisions of sub-rule (3) shall, mutatis mutandis, apply to the legal heirs of a deceased proprietor, as if the application had been submitted by the proprietor himself.
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. 9. The learned counsel for the parties have also referred to an Order dated 11.10.2023 passed in a writ petition, W.P.(C) no. 6366/2023 (Sanjoy Nath vs. The Union of India and others) wherein the petitioner therein was similarly situated like the present petitioner.
Having regard to the fact that the GST registration of the petitioner has been cancelled under Section 29(2)(c) of the CGST Act, 2017 for the reason that the petitioner did not submit returns for a period of 6 (six) months and more; and the provisions contained in the proviso to sub-rule (4) of Rule 22 of the CGST Rules, 2017 and cancellation of registration entails serious civil consequences, this Court is of the considered view that in the event the petitioner approaches the officer, duly empowered, by furnishing all the pending returns and make full payment of the tax dues, along with applicable interest and late fee, the officer duly empowered, has the authority and juri iction to drop the proceedings and pass an order in the prescribed Form.
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In such view of the matter, this writ petition is disposed of by providing that the petitioner shall approach the concerned authority within a period of 2 (two) months from today seeking restoration of his GST registration. If the petitioner submits such an application and complies with all the requirements as provided in the proviso to sub-rule (4) of Rule 22 of the CGST Rules, 2017, the concerned authority shall consider the application of the petitioner for restoration of his GST registration in accordance with law and shall take necessary steps for restoration of GST registration of the petitioner as expeditiously as possible. With the observations made and the direction given above, the writ petition is disposed of. No cost.
It is needless to say that the period as stipulated under Section 73(10) of the Central Act/ State Act shall be computed from the date of the instant judgment, except for the financial year 2024-25, which shall be as per Section 44 of the Central Act/ State Act. The petitioner herein also be liable to make payment of arrears i.e. tax, penalty, interest and late fees.
JUDGE Comparing Assistant
Reproduced from the public record of the Gauhati High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.