A recent judicial ruling has brought significant relief to taxpayers whose GST registration (GST Registration Cancellation) was cancelled due to non-filing of returns for more than six months. The judgement clarified that under Section 29(2)(c) of the Central Goods and Services Tax (CGST) Act, 2017, registration can be restored if the taxpayer completes two key compliance steps:
- Files all pending GST returns, and
- Clears all outstanding tax liabilities, interest, and penalties.
This ruling is being widely discussed in the taxation and business community because thousands of GST registrations are cancelled every year for non-compliance. The judgement reinforces a taxpayer-friendly interpretation of the law and promotes voluntary compliance while preventing unnecessary hardship to small and medium businesses.
Understanding Section 29(2)(c) of the CGST Act
Section 29 of the CGST Act deals with cancellation of GST registration.
As per Section 29(2)(c):
A proper officer may cancel the registration of a person if the registered person has not furnished returns for a continuous period of six months.
Earlier, once cancelled, it was assumed that restoration was difficult or the taxpayer must file an appeal. However, the recent judgement clarifies that cancellation is not irreversible.
Key Highlights of the Recent Judgement
1. Restoration Is Possible After Compliance: The court clarified that cancelation under Section 29(2)(c) does not permanently bar restoration.
If the taxpayer:
- Files all pending GSTR-3B/GSTR-1 returns
- Pays tax dues, interest, penalty
- Complies with all procedural requirements
…the registration must be restored.
2. Aim Is Compliance, Not Punishment: The ruling emphasised that GST laws aim to encourage compliance.
Therefore:
- If a taxpayer shows willingness to comply
- And removes the cause of cancellation
…the department should favourably consider restoration.
3. Department Cannot Deny Revival Arbitrarily: The judgement warned that officers cannot mechanically reject restoration applications.
They must:
- Verify compliance
- Apply the law fairly
- Avoid arbitrary refusal
This ensures transparency and prevents harassment.
4. Supports MSMEs and Small Businesses: Many small businesses fail to file returns due to:
- Financial stress
- Technical issues
- Lack of awareness
- Pandemic-related disruption
The judgement gives these businesses a chance to revive operations legally and continue business.
Practical Implications for Taxpayers
1. Chance to Revive Cancelled GSTIN: Taxpayers whose registration was cancelled due to non-filing now have a clear legal path to revival.
2. Reduced Need for Costly Litigation: Earlier, businesses had to go through:
- Appeals
- Writ petitions
- High Court directions
Now, restoration becomes administrative, not judicial.
3. Improved Ease of Doing Business: Restored registrations help businesses restart:
- Billing
- Input Tax Credit flow
- Supplier relationships
- Online marketplace activities
4. Government Benefits Through Higher Compliance: Restoration ensures:
- More return filings
- Higher tax collection
- Stronger compliance culture
This aligns with GST’s core objectives.
What Taxpayers Should Do Now
To apply for restoration, taxpayers should:
✔ File all pending returns
(Files of GSTR-3B, GSTR-1, GSTR-9 if applicable)
✔ Pay all dues
(Tax, interest, late fees, penalties)
✔ Submit an application for revocation
(Through GST Portal – “Application for Revocation of Cancelled Registration”)
✔ Respond to notices if any
(The officer may request additional clarification)
Example Scenario
A business did not file returns for 8 months. Officer cancelled GSTIN under Section 29(2)(c).
After the judgement:
- Business files all pending returns
- Clears dues
- Applies for reinstatement
→ Officer is bound to restore the GST registration, unless there is fraud or intentional evasion.
Conclusion
The recent judgement provides much-needed relief and clarity regarding GST registration cancellation under Section 29(2)(c). It confirms that cancellation for non-filing of returns is not final and that registration can be restored once compliance is completed. This ruling strengthens the principle that GST laws aim to promote compliance—not punish taxpayers unnecessarily.
For many businesses, especially MSMEs, this judgement opens the door to re-start lawful operations, improve compliance, and seamlessly re-enter the GST ecosystem.
FAQs
1. Can GST registration cancelled for 6+ months of non-filing be restored?
Ans: Yes. The judgement clearly states that restoration is possible if pending returns are filed and dues are paid.
2. Do I need to go to court for restoration?
Ans: Not necessarily. If you file returns and apply for revocation, the GST officer must consider revival positively.
3. What returns must be filed before applying for restoration?
Ans: All pending GSTR-3B, GSTR-1, and any other applicable returns (e.g., GSTR-9 for annual return).
4. Is there a deadline for applying for revocation?
Ans: Yes, generally within 30 days of cancellation.
But courts often allow relaxation, and the government periodically extends this timeline.
5. Can GSTIN be restored if huge dues are pending?
Ans: Yes, but only after clearing all dues — tax, interest, late fee, and penalty.
6. Will I get input tax credit (ITC) for restored GSTIN?
Ans: You may claim eligible ITC after restoration, subject to GST rules and return filing timelines.
My self Anita Sahani. I have completed my B.Com from Purbanchal College Silapathar. I am working in Dev Library as a Content Manager. A website that provides all SCERT, NCERT 3 to 12, and BA, B.com, B.Sc, and Computer Science with Post Graduate Notes & Suggestions, Novel, eBooks, Health, Finance, Biography, Quotes, Study Materials, and more.
