Gauhati High Court Provides Relief for Cancelled GST Registrations

GST registration is crucial for any business because it allows the collection of GST, claiming input tax credit, and legally conducting operations.

However, if a taxpayer fails to file GST returns for six consecutive months, the GST law allows cancellation of registration under Section 29(2)(c) of the CGST Act, 2017. This is a serious civil consequence because without GST registration, a business cannot operate legally.

In a recent judgment, the Gauhati High Court addressed this issue for M/s Real Enterprise, providing clarity and relief for taxpayers who face cancellation due to procedural defaults.

Background of the Case

M/s Real Enterprise, a sole proprietorship, was registered under both CGST and Assam GST laws.

The business did not file GST returns for six consecutive months, which triggered a Show Cause Notice (SCN) from the GST department.

The petitioner did not respond to the SCN or attend hearings.

On September 14, 2023, the GST officer cancelled the registration without providing detailed reasons.

This created a serious civil consequence as the business was no longer legally allowed to operate or collect GST.

Legal Provisions Involved

Section 29(2)(c) of CGST Act, 2017

Allows cancellation of GST registration if a taxpayer fails to file returns for six consecutive months.

Rule 22(4) Proviso of CGST Rules, 2017

Provides an opportunity to restore GST registration if:

All pending returns are filed, and

All dues (tax, interest, penalties, late fees) are paid.

Restoration is processed using Form GST REG-20.

Court’s Observations

The Court emphasized:

Cancellation of GST registration is a serious civil consequence, affecting the right to do business.

Despite the appeal being rejected, the interest of justice requires giving taxpayers a chance to restore their registration.

Court’s Directions

Time Frame for Application

M/s Real Enterprise must approach the GST authority within 2 months from the date of the order to apply for restoration.

Compliance Requirement

File all pending GST returns.

Pay all pending tax, interest, penalty, and late fees.

Authority Action

The GST officer must consider the application and take necessary steps to restore registration as expeditiously as possible.

Time Limits for Tax Demand

The period under Section 73(10) (for raising tax demands) will start from the date of this Court order.

For FY 2024–25, the timeline will follow Section 44 (annual return provisions).

Key Takeaways for Businesses

Cancellation is serious, but not permanent – restoration is possible if compliance is met.

File pending returns and clear dues promptly to avail relief.

Act quickly – applications for restoration must be submitted within the Court-specified period.

Legal clarity – deadlines for tax demands reset from the date of the Court order, providing a fresh timeline.

Courts prioritize justice – even if procedural errors occurred, genuine taxpayers can get a second chance.

Why This Matters

This case is significant because:

It provides a clear legal path for restoring GST registration after cancellation.

Highlights the importance of compliance for businesses to avoid cancellations.

Shows that the judiciary balances enforcement with fairness, supporting genuine businesses rather than strictly punishing technical defaults.

Serves as a guideline for businesses across India facing similar situations.

Conclusion

The Gauhati High Court ruling for M/s Real Enterprise demonstrates that GST law, while strict, also allows businesses to rectify mistakes. Taxpayers who have missed filing returns or faced registration cancellation should act quickly, file pending returns, and pay dues to restore their registration.