GST registration cancelled for non-filing may be restored upon filing returns and paying statutory dues.

The petitioner’s registration under the West Bengal Goods and Services Tax Act, 2017 and the Central Goods and Services Tax Act, 2017 was cancelled for failure to furnish returns for a continuous period of six months.

A show-cause notice dated 13 May 2024 was issued proposing cancellation on that ground; however, the petitioner did not submit a reply, resulting in cancellation of the registration by order dated 2 August 2024.

The petitioner submitted that he remained willing to comply with the statutory requirements and sought an opportunity to file the pending returns and pay the applicable tax, interest, fine and penalty.

The petitioner relied on Subhakar Golder v. Assistant Commissioner of State Tax, Serampore Charge, MAT 639 of 2024, decided on 9 April 2024, where cancellation had been set aside subject to similar conditions.

The CGST authorities opposed the petition, contending that the cancellation followed the petitioner’s failure to comply with the statutory requirements and failure to respond to the show-cause notice.

Whether the cancellation of the petitioner’s GST registration solely for non-filing of returns should be set aside where the petitioner expresses willingness to file the returns and discharge the applicable tax, interest, fine and penalty?

Whether the petitioner should be permitted to comply with the statutory requirements through activation of the GST portal and restoration of registration subject to stipulated conditions?

The Court applied the statutory framework governing registration and return compliance under the WBGST/CGST Acts, 2017, under which failure to furnish returns may constitute a ground for cancellation of registration.

It also applied the pragmatic principle that cancellation or suspension of registration should not be maintained where restoration, subject to payment of the lawful dues and filing of returns, would better serve revenue interests, particularly when there is no allegation of tax evasion or other dubious conduct.

The Court relied on the Division Bench decision in Subhakar Golder v. Assistant Commissioner of State Tax, Serampore Charge, MAT 639 of 2024, which permitted restoration of registration subject to filing returns for the entire default period and payment of tax, interest, fine and penalty.

Although the authorities had issued a show-cause notice and were justified in noting that the petitioner had not filed returns or responded to the notice, the Court considered that the default was confined to non-filing of returns and that there was no allegation that the petitioner had adopted any dubious process to evade tax.

The Court reasoned that continued cancellation would prevent the petitioner from issuing invoices and carrying on business, which could ultimately operate against revenue recovery.

Since the respondents could not determine the petitioner’s final tax liability until the returns were filed, the Court adopted the approach approved in Subhakar Golder and set aside the cancellation conditionally, requiring the petitioner to file all returns for the default period and pay the applicable tax, interest, fine and penalty.

The petitioner was required to comply within four weeks from receipt of the server copy of the order; upon such compliance, the Jurisdictional Officer was directed to restore the registration.

The respondents were directed to activate the petitioner’s portal and login credentials within one week to enable compliance.

Failure to comply would result in the benefit of the order not accruing to the petitioner and automatic dismissal of the writ petition.

The writ petition was disposed of without any order as to costs.