Court Directs Compliance with CGST Rules for Restoration Following Non-Filing of Returns
In a significant judgment, the Gauhati High Court has directed the restoration of GST registration for Md. Nekib Hussain, a businessman from Assam, after it was cancelled due to non-filing of GST returns for six months. The ruling underscores the serious civil consequences of such cancellations and provides a pathway for affected parties to have their registrations restored, contingent on compliance with statutory requirements.
The court, presided over by Justice Kardak Ete, considered the petition filed by Md. Nekib Hussain, whose GST registration was cancelled by an order dated March 9, 2023, due to the non-filing of returns. Hussain, engaged in works contract services, attributed the lapse to his tax consultant's negligence, which led to a show-cause notice being issued and subsequent suspension of his GST registration from January 15, 2023.
Hussain's counsel, Mr. R. S. Mishra, argued that the failure to file returns was not intentional and that Hussain was prepared to fulfill all necessary formalities for restoration. The court noted a similar case, Dhirghat Hardware Stores v. Union of India, which set a precedent for such matters.
The judgment outlined that under Section 29(2)(c) of the Central Goods and Services Tax Act, 2017, and Rule 22 of the CGST Rules, 2017, an empowered officer can cancel a GST registration if returns are not filed for six months. However, the court emphasized that if the registrant is willing to submit all pending returns and pay due taxes, interest, and penalties, the officer should consider dropping the cancellation proceedings and restoring the registration.
Justice Ete directed Hussain to approach the concerned authority within 60 days to seek restoration of his GST registration. The court stipulated that upon compliance with Rule 22(4) of the CGST Rules, 2017, including the submission of pending returns and payment of dues, the authority should act swiftly to restore the registration. The judgment also clarified the computation of the period under Section 73(10) of the CGST Act, highlighting that it should begin from the date of the court's order, with specific provisions for the financial year 2024-25.
The ruling is expected to provide relief to businesses facing similar issues, emphasizing the importance of procedural compliance and the opportunity for rectification in the GST framework.
Bottom line:-
GST Registration - Non-filing of GST returns for six months - Cancellation of GST registration - Restoration of GST registration permissible if the petitioner furnishes all pending returns, complies with Rule 22(4) of CGST Rules, 2017, and pays applicable dues, interest, and penalties.
Statutory provision(s): Central Goods and Services Tax Act, 2017, Section 29(2)(c), Rule 22 of CGST Rules, 2017, Section 73(10) of CGST Act, Section 44 of CGST Act
Md. Nekib Hussain v. Union of India, (Gauhati) : Law Finder Doc id # 2920640
