GST Registration Cancellation Can Be Revoked: Gauhati High Court
Grants Relief in Sonu Ahuja Case
(Sonu Ahuja Vs. The State of AP and 2 Ors - Gauhati High Court)
Introduction
In an important and
practical decision, the Gauhati High Court has provided relief to a taxpayer
whose GST registration was cancelled due to non-filing of returns. The Court
made it clear that cancellation should not permanently block a genuine taxpayer
from continuing business, especially when the taxpayer is willing to comply
with the law. This judgment reinforces a fair approach in GST matters where
compliance can still be corrected.
Background of the Case
The petitioner, Sonu
Ahuja, was engaged in works contract services under a proprietorship firm and
was duly registered under GST law. However, due to continuous non-filing of GST
returns for more than six months, the department issued a show cause notice and
later cancelled his GST registration on 20.04.2024. The cancellation order was
passed without giving proper reasons.
The petitioner approached
the Court and explained that the default occurred due to the negligence of his
tax consultant, who failed to inform him about the non-compliance. He also
submitted that he had already updated his GST returns up to April 2024 and was
ready to comply with all legal requirements.
Legal Issue Before the
Court
The main issue before the
Court was whether a taxpayer whose GST registration has been cancelled due to
non-filing of returns can be given another opportunity to restore registration
when he is ready to file pending returns and pay all dues.
Reference to Earlier
Judgment
While deciding the case,
the Gauhati High Court relied on its earlier judgment in Dhirghat Hardware
Stores vs Union of India, where a similar issue was considered. In that
case, the Court had already held that if a taxpayer is ready to file pending
returns and pay tax along with interest and late fees, then the department
should consider restoring the GST registration.
The Court also referred
to other similar cases where relief was granted to taxpayers in identical
situations, thereby maintaining consistency in judicial decisions.
Court’s Observations
The Court observed that
cancellation of GST registration has serious consequences for a business, as it
directly affects the ability of the taxpayer to operate. It also noted that the
GST law itself provides an opportunity under Rule 22 of the CGST Rules, 2017,
where proceedings can be dropped if the taxpayer furnishes all pending returns
and pays the required dues.
The Court emphasized that
when a taxpayer is ready and willing to comply, a rigid approach should not be
taken. Instead, authorities should adopt a practical and fair view to allow
restoration of registration.
Final Decision
Based on the facts and
earlier judgments, the Gauhati High Court granted relief to the petitioner. The
Court allowed the petitioner to approach the concerned GST authority within 60
days for restoration of registration.
It was directed that if
the petitioner files the application and complies with all requirements,
including filing of pending returns and payment of tax, interest, penalty, and
late fees, then the department should consider restoring the GST registration as
per law and as quickly as possible.
The Court also clarified
that limitation under Section 73(10) would be calculated from the date of this
order, giving further protection to the taxpayer.
Conclusion
This judgment clearly
shows that GST registration cancellation is not always final and can be
reversed if the taxpayer is willing to correct the default. The Gauhati High
Court has taken a balanced view by protecting the rights of the taxpayer while
ensuring compliance with the law.
It sends a strong message
that genuine taxpayers should not suffer permanently due to procedural lapses,
especially when they are ready to fulfill all legal obligations.
Disclaimer: All the Information is based on the notification, circular advisory and order issued by the Govt. authority and judgement delivered by the court or the authority information is strictly for educational purposes and on the basis of our best understanding of laws & not binding on anyone.
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