Nipunjay Basumatary vs. The State Of Assam And 3 Ors.
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The petitioner, M/s Nipunjay Basumatary, a proprietor registered under CGST/AGST Act, 2017, had his GST registration cancelled by the Assistant Commissioner, Bongaigaon-1, via an order dated 19.11.2019. This cancellation was due to non-filing of GST returns for a continuous period of six months. The petitioner received a show cause notice dated 07.11.2019 but claims he did not attend the personal hearing as no date was notified. He subsequently found he could not file an application for revocation of cancellation due to the expiry of the 270-day time limit. An appeal filed before the Joint Commissioner of State Tax (Appeals) was dismissed on 06.12.2024. Aggrieved, the petitioner filed a writ petition before the High Court.
Held
The Court held that cancellation of GST registration carries serious civil consequences. Referring to Section 29(2)(c) of the CGST Act, 2017, and the proviso to Rule 22(4) of the CGST Rules, 2017, the Court found that if a person served with a show cause notice for non-filing of returns is willing to furnish all pending returns and make full payment of tax dues, interest, and late fees, the empowered officer has the authority to drop the proceedings. The Court noted that the petitioner's GST registration was cancelled for non-filing of returns for over six months. Therefore, the Court directed the petitioner to approach the concerned authority within two months from the date of the order, seeking restoration of his GST registration. If the petitioner complies with the requirements of the proviso to Rule 22(4), the authority shall consider the application for restoration in accordance with law and take necessary steps expeditiously. The Court also clarified that the period under Section 73(10) of the CGST/SGST Act shall be computed from the date of the judgment, except for FY 2024-25, which will be as per Section 44. The petitioner is liable to pay arrears, including tax, penalty, interest, and late fees.
Key Issues
1. Whether the petitioner is entitled to seek restoration of his GST registration despite the expiry of the statutory time limit for revocation, considering the proviso to Rule 22(4) of the CGST Rules, 2017? The petitioner argued that due to reasons beyond his control, he could not submit returns for approximately six months. He expressed readiness to comply with the requirements of the proviso to Rule 22(4) of the CGST 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 also referred to a previous High Court order in a similar case (Sanjoy Nath vs. Union of India). The respondents, represented by the State, did not explicitly record arguments against the petitioner's plea for restoration based on the proviso to Rule 22(4). The Court's decision was primarily based on the interpretation and application of the relevant CGST Act and Rules.
Sections Cited
Section 29, Section 39, Section 73, Rule 22, Rule 21A, Rule 20, Rule 17, Rule 18, Rule 19, Rule 20, Section 44
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
ORDER
08-04-2025
Heard Mr. R.S.Mishra, learned counsel for the petitioner and Mr. B. Choudhury, learned Standing counsel, Finance and Taxation Department, Assam for the respondent Nos. 1 to 4. 2. It is the case of the petitioner that he has been carrying out his business under the name & style, “M/s Nipunjay Basumatary”. He is the sole proprietor and is an Assesee registered under the Central Goods and Services Tax (CGST) Act, 2017/Assam Goods and Services Tax (AGST) Act, 2017 bearing registration No. 18ATLPB5706C1Z0. Because of non-filing of GST returns for a continuous period of six months, the petitioner was served with a show cause notice bearing reference No. ZA181119013513S dated 07.11.2019 asking him to furnish reply to the aforesaid notice within a period 7 (seven) working days from the date of service of notice and it was mentioned in the aforesaid show cause notice that if the petitioner fails to furnish a reply within the stipulated date or fail to appear for personal hearing on the appointed date and time, the case will be decided ex- parte on the basis of the available records and on merits. However, no date for personal hearing was ever notified. Thereafter, the impugned order dated 19.11.2019 was issued by the Assistant Commissioner, Bongaigaon-1, whereby the petitioner’s GST registration has been cancelled for not furnishing returns for a continuous period of 6 [six] or more months.
The petitioner contends that as he is not much conversant with the online procedure, so he did not visit the GST portal for around few weeks when the show cause notice was issued and thereafter, when the petitioner came across the said notice, the time for filing
Page No.# 3/6 reply and attending the hearing was already over and order had also been passed.
Thereafter, the petitioner tried to file the necessary application seeking revocation of GST cancellation, however, the same could not be filed as the time limit prescribed for filing of revocation application was elapsed and a message was displayed in the screen “timeline of 270 days from the date of cancellation order provided to taxpayer to file application for revocation of cancellation is expired.” Subsequently, the petitioner on 30.10.2024, preferred an appeal before the respondent the appellate authority, respondent No.
However, the said appeal was dismissed on 06.12.2024. 5. Being aggrieved, the petitioner approached this Court by filing the present writ petition.
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 [six] months or more. However, he has 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.
Rule 22 of the CGST Rules, 2017 being bone of contention is quoted herein below:- 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
Page No.# 4/6 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 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 Page No.# 5/6 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. 10.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. 11.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. 12.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
Page No.# 6/6 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 GST Act/State GST 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 GST Act/State GST 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.