High Court Sets Aside Rejection of GST Registration Application; Remits for Fresh Consideration

High Court Sets Aside Rejection of GST Registration Application; Remits for Fresh Consideration

The petitioner was registered under GST, but its registration was cancelled on 22.02.2023 after non-filing of returns for six consecutive months. No challenge was made to that cancellation. Thereafter, the petitioner filed updated returns up to February 2023 and paid taxes to the extent permitted by the GST portal before applying for fresh registration.

A notice dated 06.08.2024 was issued by the Deputy Commissioner of State Tax calling for all pending returns up to the month prior to the fresh application. The petitioner stated that the GST portal did not allow filing beyond February 2023. In spite of this, the application was rejected with a one-line order dated 17.08.2024 without stating any reasons.

In the counter affidavit, the department contended that the petitioner had failed to apply for revocation of the earlier cancellation or appeal before the Appellate Authority. It relied on CBIC Circular No. 95/14/2019 to contend that fresh registration could be refused if defaults under Section 29(2)(b) and (c) continued. Reference was also made to amnesty schemes for the restoration of cancelled registrations.

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Issue Raised: Whether rejection of the fresh GST registration application, passed without recording findings required under Section 29(2) CGST Act and CBIC Circular 95/14/2019, was legally sustainable.

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HC Held: The Court held that a fresh application for registration is not barred by law. But the correct officer is required to note findings on whether revocation of cancellation had been requested and whether conditions under Section 29(2) persisted. The order dated 17.08.2024 was completely unreasoned and did not fulfill these requirements.

Thus, the rejection order was quashed, and the case was remitted to the Deputy Commissioner of State Tax for reconsideration. It was ordered that if the statutory compliance is necessary, the petitioner should be afforded an opportunity for compliance after which a reasoned order should be issued in accordance with law.

The writ petition was allowed to this extent.

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