Guwahati High Court Allows GST Registration Restoration After 270-Day Lapse: Relief for Post-Compliance Taxpayers
In a landmark judgment, the Guwahati High Court in Munni Char W/O Shri Dipak Char vs The Union of India [WP(C)/3754/2025, dated 27-Jun-2025] has held that a cancelled GST registration can be restored even after the expiry of the 270-day revocation period, provided the taxpayer has cleared all pending returns and dues. The Court interpreted the proviso to Rule 22(4) of the CGST Rules as granting discretionary powers to tax officers to drop cancellation proceedings in deserving cases. This ruling brings significant relief to small and remote-area taxpayers who may miss digital deadlines but later achieve full compliance.
Facts and Issue of the Case
In a significant development offering relief to taxpayers grappling with GST compliance hurdles, the Guwahati High Court in Munni Char W/O Shri Dipak Char vs The Union of India [WP(C)/3754/2025, dated 27-Jun-2025] has allowed restoration of cancelled GST registration, even though the statutory revocation period of 270 days had lapsed. The petitioner, a resident of a remote area in Assam, faced cancellation of her GST registration due to a six-month default in filing returns and payment of dues. According to her plea, the lapse was unintentional and caused primarily by limited internet access and lack of awareness of the electronic notices issued under GST provisions.
The central issue before the Court was whether an assessee whose registration was cancelled due to non-compliance for six months could seek restoration after the expiry of the prescribed time limit, provided that all dues and returns were subsequently cleared. The case presents a critical interpretation of Rule 22(4) of the Central Goods and Services Tax Rules, 2017, especially its proviso, in the context of technical lapses and compliance rectification. The petitioner had met all filing and payment obligations after cancellation but was barred by the GST portal from applying for revocation since the 270-day deadline (from the date of cancellation) had expired. Her plea for restoration was thus based on her compliance post-cancellation and her interpretation of the Rule’s proviso, which she argued provided discretionary powers to the Proper Officer to revoke cancellation in deserving cases.
Observation by the court and tribunal
The Guwahati High Court, after examining the factual matrix and legal provisions, offered a taxpayer-friendly interpretation. The Court recognized the genuine hardship of the petitioner, noting that she resided in a remote area with poor digital infrastructure and had not received adequate notice regarding the cancellation proceedings. The Court emphasized that the GST regime, while based on digital platforms, must not become a tool for depriving small or marginalized taxpayers of their rights, especially when the taxpayer has demonstrated a willingness to comply and has rectified all defaults.
Crucially, the Court observed that the proviso to Rule 22(4) confers sufficient discretion upon the Proper Officer to drop cancellation proceedings in cases where the taxpayer has filed all pending returns and paid applicable taxes, interest, and penalties. The Court found merit in the petitioner’s argument that the law’s objective is not merely punitive but to ensure compliance. Once compliance is achieved, rigid procedural deadlines should not defeat the broader goal of keeping taxpayers within the formal system. Moreover, the Court noted that the online portal’s technical restrictions should not override substantive rights granted under the Rules. It directed the Department to allow the petitioner to file an appropriate restoration application and process it expeditiously within two months from the date of the order.
Law applicable
The crux of the legal debate revolved around Rule 22(4) of the CGST Rules, which governs revocation of cancellation of registration. According to the Rule, a registered person whose registration has been cancelled can apply for revocation within 30 days of the cancellation order. The time limit is further extendable up to 270 days under various circumstances, including by appeal to higher authorities. However, the proviso to Rule 22(4) states that if the taxpayer furnishes all pending returns and clears dues including tax, interest, and late fee, the officer may drop the cancellation proceedings altogether.
The petitioner relied on this proviso to argue that post-compliance restoration should be possible even beyond the outer 270-day limit, particularly in cases where the delay was due to genuine and reasonable cause. The Department, on the other hand, took a strict view, stating that since the 270-day period had expired, the portal rightly barred her from seeking revocation. However, the Court clarified that the discretion granted under the proviso cannot be rendered meaningless by digital constraints. Furthermore, the Court instructed that for the purposes of Section 73(10) (relating to the limitation for issuing orders for tax not paid or short paid), the timeline shall begin from the date of this order. For Financial Year 2024–25, however, the limitation would be governed separately under Section 44, which pertains to annual returns.
This interpretation reinforces the broader principle that rules must be interpreted in a manner that furthers legislative intent and ensures that substantive compliance is not frustrated by procedural rigidity.
Conclusion by the tribunal or court
The Guwahati High Court’s ruling offers substantial relief to small taxpayers and those in underserved regions, where digital connectivity remains a challenge. It affirms the view that taxpayers who have shown good faith by clearing all dues and filing pending returns should not be left out of the GST system merely due to procedural time limits. The judgment underscores the importance of a balanced approach where the revenue authorities are empowered to ensure compliance but also guided by principles of equity and fairness.
From a policy standpoint, this decision could set a persuasive precedent for similar cases across India. It also calls into question whether the GST portal’s technical design should be more accommodative of discretionary relief under Rule 22(4). For taxpayers, the judgment is a reassurance that genuine efforts at post-default compliance can pave the way for restoration of registration—even after missing the revocation window.
In essence, the Guwahati High Court has not just decided in favour of one petitioner—it has articulated a principle of inclusive tax administration, where the law serves its intended purpose of encouraging voluntary compliance without being unreasonably punitive. Tax professionals and businesses must take note of this ruling while advising clients on GST registration revocation and restoration matters, especially in cases involving technical lapses or infrastructural challenges.
