🧭 Introduction
In a landmark ruling, the Gauhati High Court has clarified that GST registration cancelled due to non-filing of returns for six months or more must be reinstated if the taxpayer clears all pending dues and files the outstanding returns. This verdict provides a vital lifeline to small and medium enterprises (SMEs) struggling with compliance, ensuring they can resume operations without needless legal barriers.
✅ Background: Why GST Registrations Are Cancelled
Under Section 29(2)(c) of the CGST Act, a GST registration is automatically cancelled if a taxpayer fails to file returns for six continuous months. While intended to enforce compliance, this strict rule has occasionally penalised genuine taxpayers who might have faltered due to technical issues, lack of awareness, or other valid reasons.
⚖️ Case at Hand: Shahima Khatun v. State of Assam & Ors.
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Petitioners: Shahima Khatun (proprietor of a small business) and others
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Ground: GST registration cancelled after missing six monthly returns
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Court: Bench of Justice Sanjay Kumar Medhi
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Key Legal Provision: Proviso to sub‑rule (4) of Rule 22 (CGST Rules, 2017)
The petitioner had not submitted GST returns for over six months and received a show‑cause notice. She claimed that unfamiliarity with the government portal and impacts from COVID-19 prevented timely compliance. Eventually, she filed all pending returns and paid the outstanding dues—including taxes, interest, and late fees.
The court held that the empowered officer can drop the cancellation proceedings and restore GST registration by issuing Form GST REG‑20, once dues are cleared and returns filed
📜 Legal Interpretation: Rule 22(4) Proviso & Article 226
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Rule 22(4) Proviso: Allows restoration if taxpayer demonstrates readiness to pay dues and file returns
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Article 226 of the Constitution gives High Courts power to grant relief beyond statutory timelines in public law matters
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Outcome: Court ordered taxpayer to apply within two months; once conditions met, registration must be reinstated
📊 Summary Table: Proceedings & Timeline
| Action | Requirement | Timeline |
|---|---|---|
| Non-filing of returns for 6 months | Automatic cancellation under Sec 29(2)(c) | Immediate |
| PETITION filed | Within reasonable time post-cancellation | N/A |
| Payment of Dues | All taxes, interest, late fee | Before petition |
| FORM GST REG‑20 | Application for reinstatement | Within 2 months of judgment |
| Reinstatement Order | Authority to issue once conditions met | As expeditiously as possible |
💡 Practical Insights: Steps for Taxpayers
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Check status on GST portal to confirm cancellation
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File all overdue returns (GSTR‑3B, GSTR‑1, others)
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Settle all dues, including tax, interest & late fees
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Prepare documentation: proof of filing & challans
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Approach proper officer with FORM GST REG‑20
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Monitor compliance after reinstatement
💭 Pro tip: Keep a buffer of 5‑10% extra to account for interest accruing daily until portal acknowledgment.
🛠️ Why This Ruling Matters: Benefits & Impact
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Restores business continuity: No need to re-register or halt supplies
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Reduces legal burden: Prevents unnecessary appeals & complicated litigation
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Protects SMEs: A practical safeguard for small players still learning the GST system
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Encourages voluntary compliance: Highlights that recovery is possible even after default
📈 Real Example
A sole proprietor, Ms. Riju Moni Gogoi, faced similar cancellation but couldn't apply online after 270 days expired. The court still allowed reinstatement, mandating the authority to issue fresh registration after compliance, highlighting the judiciary’s flexibility to uphold substantive justice
📝 Conclusion
The Gauhati High Court’s ruling restores faith in India's GST system. While rules for cancellation are strict, a pathway to relief exists for genuine taxpayers. Clearing dues and filing returns—no matter how delayed—can lead to registration restoration and business revival. This judgement underscores the value of clarity, fairness, and a compliance-driven approach.
🔍 Frequently Asked Questions (FAQs)
Q1: Can GST registration be restored after 270 days of cancellation?
Yes. While the portal blocks online application post-deadline, the High Court ruled courts can intervene, allowing reinstatement even after statutory limits .
Q2: Is payment of late fees and interest mandatory?
Absolutely. Full payment of tax dues, accrued interest, and late fees is a prerequisite for reinstatement as per Rule 22(4) proviso
Q3: How long does authorities have to restore registration?
The court expects expedited processing once FORM GST REG‑20 is submitted, though no fixed timeline is prescribed.
Q4: Do I need legal representation?
Not necessarily, but professional help (CA or GST consultant) ensures correct documentation and timely filing.
Q5: Does this judgement apply beyond Assam?
Yes. It interprets central provisions (CGST Act and Rules), making it a persuasive precedent for other High Courts and AARs.
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