The Gauhati High Court has held that automatic cancellation of GST registration solely due to non-filing of returns for over six months, without considering personal hardship or opportunity to rectify, violates the principles of natural justice and proportionality. This ruling reinforces that administrative action under tax law must be balanced, reasonable, and responsive to individual circumstances.
Background & Facts
The Dispute
The petitioner, Basanta Kumar Gogoi, is a sole proprietor operating under the business name "Eastern Power Tech." He was registered under the Assam Goods and Services Tax Act, 2017, with GST Registration No. 18AGOPG9677P1Z6 issued on 23.09.2017. His registration was cancelled on 29.10.2024 by the Assistant Commissioner of State Tax, Guwahati-D-8, on the ground that he had failed to file GSTR-1 and GSTR-3B returns for a continuous period exceeding six months.
Key Facts
- The petitioner’s registration was suspended w.e.f. 13.05.2024 via Show Cause Notice (Form GST REG-17/31) issued on the same date.
- The petitioner attributed the default to acute family burdens and unavoidable personal circumstances, which prevented him from coordinating with his tax consultant.
- The petitioner filed the GSTR-3B return for October 2024 (Financial Year 2024-25), which was annexed to the writ petition as Annexure-4.
- No opportunity was granted to the petitioner to explain the delay or to file pending returns before cancellation.
- The petitioner filed an appeal under Section 107 of the Assam GST Act, 2017 on 15.11.2025 against the cancellation order.
- The Appellate Authority (Respondent No. 3) dismissed the appeal on 12.12.2025 solely on the ground of limitation, without examining the merits of the case.
Procedural History
- 23.09.2017: GST registration granted to petitioner under Assam GST Act, 2017.
- 13.05.2024: Show Cause Notice issued for suspension and proposed cancellation of registration due to non-filing of returns for over six months.
- 29.10.2024: Registration cancelled by Assistant Commissioner, Guwahati-D-8.
- 15.11.2025: Petitioner filed appeal under Section 107 of AGST Act, 2017.
- 12.12.2025: Appellate Authority dismissed appeal on technical ground of limitation.
- 06.04.2026: Writ petition filed before the Gauhati High Court and decided on the same day.
Relief Sought
The petitioner sought quashing of the cancellation order dated 29.10.2024, reinstatement of his GST registration, and direction to the authorities to permit filing of pending returns without penalty or with reasonable condonation of delay.
The Legal Issue
The central question was whether Section 73(10) of the CGST Act, 2017 permits automatic cancellation of GST registration solely on the ground of non-filing of returns for six months, without affording the taxpayer an opportunity to explain the default or to rectify it, particularly when personal hardship is demonstrated.
Arguments Presented
For the Petitioner
The petitioner’s counsel, Mr. U.S. Bora, argued that cancellation of registration without a hearing or opportunity to file pending returns violates natural justice and the principle of proportionality. He relied on the recent judgment in Motaleb Bhuyan v. State of Assam & Ors (2025 SCC OnLine Gau 1429), where the Court held that administrative cancellation without considering mitigating circumstances is arbitrary. He emphasized that the petitioner had filed the return for October 2024, indicating willingness to comply, and that the delay was due to genuine personal hardship, not wilful evasion.
For the Respondent
The Additional Advocate General, Mr. B. Gogoi, conceded that the Appellate Authority had dismissed the appeal on limitation grounds without adjudicating the merits. He did not contest the petitioner’s claim of hardship but argued that statutory compliance is mandatory and that the cancellation was procedurally correct under the law. However, he did not oppose the Court’s intervention in light of the precedent set in Motaleb Bhuyan.
The Court's Analysis
The Court observed that the cancellation of GST registration is a severe administrative action with cascading consequences, including loss of input tax credit, inability to issue invoices, and disruption of business operations. It noted that while non-filing of returns is a statutory violation, the law does not mandate automatic cancellation without considering the context.
"The statutory provision does not contemplate a mechanical application of the rule. The authority must exercise discretion, taking into account the nature of default, the conduct of the taxpayer, and whether the default was due to inadvertence or hardship."
The Court relied heavily on Motaleb Bhuyan v. State of Assam & Ors, wherein it was held that cancellation under Section 73(10) cannot be treated as a punitive measure without affording a reasonable opportunity to comply. The Court emphasized that the petitioner had not been given any chance to file pending returns before cancellation, nor was any inquiry conducted into the reasons for the delay.
The Court further noted that the Appellate Authority’s dismissal of the appeal on limitation alone, without addressing the substantive issue, compounded the injustice. It held that such procedural rigidity cannot override the fundamental right to be heard under Article 14 and 21 of the Constitution.
The Verdict
The petitioner succeeded. The Court set aside the cancellation order dated 29.10.2024 and quashed it. The petitioner is directed to file all pending returns from 13.05.2024 till the date of judgment within 30 days. The period under Section 73(10) of the CGST Act, 2017 shall be computed from the date of this judgment, except for FY 2025-26, which shall be governed by Section 44. The petitioner shall pay all arrears of tax, interest, penalty, and late fees as determined by the authorities, subject to the filing of returns.
What This Means For Similar Cases
Cancellation Is Not Automatic
- Practitioners must now argue that Section 73(10) requires a discretionary, not mechanical, application.
- Non-filing for six months alone is insufficient grounds for cancellation; the authority must examine intent, hardship, and opportunity to comply.
- Any cancellation order issued without a hearing or notice to rectify is liable to be quashed.
Appellate Authorities Must Decide on Merits
- Dismissal of appeals solely on technical grounds like limitation, without adjudicating substantive issues, is impermissible when fundamental rights are at stake.
- Taxpayers who demonstrate genuine hardship and willingness to comply are entitled to condonation of delay under Section 107(5).
- Courts will intervene where administrative action is disproportionate to the default.
Compliance Can Be Remedied Post-Cancellation
- Filing pending returns after cancellation does not render the petition infructuous; courts may still grant relief if the default is rectifiable.
- Practitioners should always annex proof of compliance (e.g., filed returns) in writ petitions to demonstrate bona fides.
- The Court’s direction to compute Section 73(10) period from the judgment date sets a precedent for equitable relief in similar cases.
