[2025] 181 taxmann.com 437 (Guwahati High Court)
📅 Order Date: 26 November 2025
⚖ Court: Guwahati High Court
📚 Subject: GST Registration Cancellation – Natural Justice – Restoration of Registration
Guwahati High Court in Monojit Debnath vs Union of India & 3 Ors. (WP(C) 6486/2025) held that cancellation of GST registration solely on account of non-filing of returns cannot be automatic if the taxpayer shows willingness to become compliant and is willing to file returns and clear dues.
🔍 Background of the Case
The petitioner was a registered GST taxpayer whose GST registration was cancelled by the department on the ground of non-filing of GST returns for a continuous period.
A sole proprietor — Monojit Debnath — filed a writ petition in the Guwahati High Court challenging the cancellation of his GST registration.
✔ The GSTIN was cancelled due to non-filing of GST returns continuously for six months, and a show-cause notice was issued on 13 August 2024.
✔ The petitioner could not reply in time due to illness (as per the petition’s claim) and later found that his registration was cancelled on 13 September 2024 without adequate reasons or proper opportunity.
✔ Even after filing all pending returns and clearing dues later, he couldn’t file a revocation application because the statutory period (270 days) had lapsed.
✔ The department rejected his appeal on 10 Nov 2025, prompting the writ petition.
Due to the cancellation:
- The taxpayer was unable to conduct business
- Input Tax Credit (ITC) was blocked
- Regular compliance became impossible
The assessee approached the Guwahati High Court seeking:
- Restoration of GST registration
- An opportunity to file pending returns
- Relief from harsh consequences of cancellation
⚖️ Key Issue Before the High Court
👉 Whether GST registration can be permanently cancelled merely for non-filing of returns, without giving reasonable opportunity to comply?
🧾 Arguments of the Petitioner
The taxpayer contended that:
✔ The non-filing was not intentional
✔ Cancellation of registration affects the right to carry on business
✔ Willingness was expressed to:
- File all pending returns
- Pay applicable tax, interest & late fees
✔ No serious revenue loss was caused to the department
🏛️ Observations of the Guwahati High Court
The Hon’ble Court made the following important observations:
Mere non-filing of returns without adequate opportunity and due process cannot automatically lead to permanent cancellation of GST registration.
✔ If a taxpayer demonstrates willingness to comply (file pending returns & pay dues), the registration can be restored.
✔ The petitioner was permitted to approach the appropriate authority for restoration of GST registration using Form REG-20 and to be heard within a specific timeframe.
✔ The Court also referenced relevant procedural provisions (including Rule 22(4) of the CGST Rules, 2017), which allow an officer to drop cancellation proceedings if the taxpayer becomes compliant.
✅ 1. GST Law is a Procedural Law – Not Penal in Nature
The Court held that:
- GST law aims at tax compliance, not punishment
- Cancellation should be last resort, not the first action
✅ 2. Registration is Essential for Carrying Business
Cancellation of GST registration:
- Paralyzes business operations
- Affects right to trade under Article 19(1)(g) of the Constitution
- Creates cascading financial hardship
✅ 3. Opportunity of Compliance Must Be Given
The Court observed:
“If the taxpayer is willing to file returns and clear dues, registration should not be cancelled mechanically.”
✅ 4. Principle of Natural Justice Must Be Followed
The department must:
- Give reasonable time
- Allow filing of pending returns
- Pass reasoned orders
📌 Final Judgment / Relief Granted
✔ The GST registration was ordered to be restored
✔ The assessee was directed to:
- File all pending GST returns
- Pay tax, interest, and late fee as applicable
✔ The department was directed not to take coercive action once compliance is made
🧠 Important Legal Takeaways
| Point | Explanation |
|---|---|
| ✔ GST registration is not to be cancelled mechanically | Cancellation is a drastic step |
| ✔ Non-filing alone is not sufficient | If assessee is willing to comply |
| ✔ Natural justice is mandatory | Opportunity of hearing must be given |
| ✔ Courts favor business continuity | Revenue collection > punishment |
| ✔ Restoration is possible even after cancellation | Subject to compliance |
📘 Relevant Legal Provisions Involved
- Section 29, CGST Act, 2017 – Cancellation of registration
- Section 30, CGST Act, 2017 – Revocation of cancellation
- Article 19(1)(g) – Right to carry on business
- Principles of Natural Justice
- Rule 22(4), CGST Rules,2017
🧩 Why This Judgment Is Important for Taxpayers
✅ Helps genuine businesses
✅ Prevents harsh departmental actions
✅ Supports ease of doing business
✅ Protects against arbitrary cancellation
✅ Helpful precedent for:
- GST appeals
- Writ petitions
- Revocation applications
📢 Practical Advice for Taxpayers
✔ File returns even if NIL
✔ Apply for revocation immediately if cancelled
✔ Approach High Court if appeal time is over
✔ Keep proof of willingness to comply
✔ Avoid long non-compliance gaps
🏁 Conclusion
The Guwahati High Court has once again reaffirmed that GST law is meant to facilitate business, not destroy it.
This judgment is a big relief for:
- Small traders
- MSMEs
- Businesses facing genuine hardships
👉 Registration cancellation should be corrective, not punitive.