GST Enactment Can’t Be Interpreted To Deny Right To Carry On Trade And Commerce: Bombay HC

The Bombay High Court has held that GST enactment cannot be interpreted so as to deny the right to carry on trade and commerce. The bench of Justice G. S. Kulkarni and Justice Aarti Sathe have observed that once all outstanding tax dues are cleared, authorities are obligated to consider revocation or cancellation of GST registration in accordance with Section 30 of the CGST Act read with Rule 23 of the CGST Rules. The petitioner, Kishore Nichani, had obtained GST registration on 19 July 2018 in connection with a conducting arrangement for running a restaurant and bar from his premises. Although business operations were managed by a private company, the petitioner remained the property owner and was registered under GST. The dispute arose when the State Tax Officer cancelled the petitioner’s GST registration retrospectively from 1 July 2017 on the ground of failure to file returns for more than six months. The petitioner attributed the non-compliance to severe illness during the relevant period. An initial application for revocation filed in January 2020 was allowed, and the cancellation was revoked in February 2020. However, in November 2020, a fresh show cause notice was issued and, in December 2020, the registration was again cancelled retrospectively with effect from 31 July 2017. The matter escalated when interest demands were raised and proceedings under Section 74 of the CGST Act were initiated. Following a search by the Central Anti-Evasion Wing in October 2024, the department issued Form DRC-01A intimating tax liability. The petitioner responded by voluntarily paying the entire tax liability along with applicable interest and penalty. Additional demands relating to February 2022 were also paid without contest. On 13 February 2025, the department issued Form DRC-23 confirming that all pending government dues had been cleared and restoring provisionally attached properties. Despite this, the petitioner’s GST registration remained cancelled. A representation dated 4 August 2025 seeking restoration yielded no response, prompting the petitioner to approach the High Court. The central issue before the Court was whether GST authorities could continue to keep the registration cancelled despite full payment of tax dues and compliance with statutory requirements under Section 30 and Rule 23. The petitioner argued that cancellation without proper opportunity of hearing violated the proviso to Section 29. Section 30 expressly provides for revocation of cancellation upon fulfilment of conditions. Keeping the registration cancelled despite clearance of dues was arbitrary and detrimental both to the taxpayer and to revenue. Significantly, the State conceded before the Court that there were no outstanding tax dues and that there would be no impediment to allowing the petition. The Bench emphasized that cancellation of GST registration carries serious civil consequences, as it directly impacts a person’s ability to conduct business. Referring to the statutory framework under Sections 29 and 30 of the CGST Act, the Court noted that authorities are empowered to cancel registration under specified grounds. However, revocation is equally contemplated by law where statutory conditions are satisfied. Revocation applications must be decided after granting an opportunity of hearing. The Court observed that keeping registration cancelled permanently for failure to file returns, especially when dues are subsequently cleared, does not serve the interests of revenue. The Bench reiterated that GST law is designed to ensure collection of legitimate tax and not to debar assessees from re-entering the tax system once compliance is achieved. Allowing the writ petition, the High Court held that the petitioner was entitled to restoration of GST registration in light of complete discharge of tax liability. The Court ruled that the authorities had failed to act in consonance with Section 30 read with Rule 23. The writ petition was allowed, and the respondents were directed to restore the petitioner’s GST registration with consequential benefits. Case Details Case Title: Kishore Nichani Versus The Union of India Citation: JURISHOUR-104-HC-2026(Bom) Case No.: WRIT PETITION NO.4211 OF 2025 Date: 27/01/2026 Counsel For Petitioner: Bharat Raichandani Counsel For Respondent: Amar Mishra Click Here To Read Order Read More: Once A Company Ceases To Exist Due To Amalgamation, Its GST Registration Shall Be Deemed Cancelled: Rajasthan HC

GST Enactment Can’t Be Interpreted To Deny Right To Carry On Trade And Commerce: Bombay HC

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