Businesses Should Not Be Kept Outside GST Regime Without Due Process: Gauhati High Court

The Gauhati High Court, Itanagar Bench, has granted relief to a taxpayer whose GST registration had been cancelled for non-filing of returns and directed the authorities to consider restoration of the registration upon compliance with statutory requirements. The bench of Justice Kardak Ete emphasized that cancellation of GST registration has serious civil consequences and reiterated that procedural fairness and adherence to statutory provisions cannot be ignored. The matter arose in a writ petition filed by Taba Raju, proprietor of M/s T. Tullong Enterprise, against the Union of India and GST authorities. The petitioner challenged an order dated February 19, 2020 passed by the Superintendent, CGST, Naharlagun Zone-I, whereby his GST registration was cancelled due to continuous failure to file returns. According to the records before the Court, the GST department had issued a show cause notice dated December 24, 2019 proposing cancellation on the ground that returns had not been furnished continuously for six months. Subsequently, the registration was cancelled because no reply had been submitted by the taxpayer. The petitioner argued that he had not received the show cause notice and therefore could not submit any response. It was further submitted that there was no intention to evade tax or violate the GST law. The delay in compliance was attributed to lack of familiarity with GST portal procedures and technical requirements. The petitioner also informed the Court that all pending returns had already been furnished and expressed willingness to discharge all tax liabilities, including applicable interest, late fees and penalties. During the hearing, the petitioner relied upon earlier judgments of the Gauhati High Court dealing with similar controversies involving cancellation of GST registrations. The department also fairly submitted that if pending returns had been filed and statutory dues paid, an appropriate application for restoration could be considered in accordance with law. While deciding the matter, the Court referred extensively to previous rulings interpreting Section 29(2)(c) of the CGST Act and Rule 22 of the CGST Rules. The Court highlighted the proviso to Rule 22(4), which allows proceedings for cancellation to be dropped where a taxpayer furnishes all pending returns and makes full payment of tax dues together with applicable interest and late fees. The Court reiterated an important principle emerging from earlier decisions that cancellation of GST registration carries severe consequences because it effectively pushes a person outside the GST system and creates substantial difficulties in carrying on lawful business activities. The Court observed that excluding a taxpayer from the GST framework may also not be beneficial to the revenue itself because taxes due from such persons may remain outside proper accounting and collection mechanisms. The Court also reproduced observations from previous judgments stressing that orders cancelling GST registration must be speaking orders supported by reasons. It noted that authorities exercising statutory powers cannot merely pass mechanical orders without demonstrating application of mind. Recording reasons acts as a safeguard against arbitrary exercise of power and forms an integral part of principles of natural justice. The Court held that the petitioner was entitled to similar relief. It directed the petitioner to submit an appropriate application before the concerned GST authorities within twenty days seeking restoration of GST registration. Upon receipt of such application, the authorities were directed to verify the compliance and restore the registration in accordance with law. The entire exercise was ordered to be completed within four weeks from receipt of the certified copy of the order. Case Details Case Title: Taba Raju Versus UOI Citation: JURISHOUR-1327-HC-2026(GAU) Case No.: WP(C)/223/2026 Date: 20.05.2026 Counsel For Petitioner: Kipa Yamak Counsel For Respondent: Marto Kato, SC Central Excise and Customs,Tania Kipa,DSGI Click Here To Read Order Read More: Provisional Release Can’t Be Denied Solely On Dept. Suspicion Of Misclassification And Undervaluation Of Imported Goods: CESTAT

Businesses Should Not Be Kept Outside GST Regime Without Due Process: Gauhati High Court

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