GST registration restored subject to payment of ₹50,000 cost as Court finds revival conducive to revenue and business regularization

Case Title: M/s Darshanlal Rawat Construction v. Principal Secretary, Government of Madhya Pradesh & Others
Court: High Court of Madhya Pradesh, Gwalior Bench
Petition No.: Writ Petition No. 35731 of 2024
Category: Registration Revocation / Restoration under GST
Date of Judgment: 4 July 2025
Relevant Sections: Sections 25, 29, 30 of the CGST Act, 2017; Rules 21(a), 21(h), 22, and 23 of the CGST Rules, 2017

Facts (Paras 5–7)

The petitioner, a proprietor of M/s Darshanlal Rawat Construction, faced cancellation of GST registration by the department on 7 November 2022 for failure to file returns since 2021 due to adverse family circumstances. An appeal filed against the cancellation order was dismissed by the Appellate Authority on 13 August 2024 for delay. The petitioner contended that sufficient hearing was not granted and sought one more opportunity to regularize compliance, expressing willingness to pay costs and pending dues.

Questions Before the Court

Whether the petitioner, whose GST registration was cancelled for non-filing of returns and whose appeal was dismissed on limitation, should be given an opportunity to revive registration in the interest of justice and revenue.

Observations (Paras 8–11)

The Court noted that the petitioner had indeed been served with a show cause notice and had filed a reply; hence, procedural opportunity was afforded. However, recognizing the petitioner’s financial hardship and intent to rejoin the tax regime, the Court emphasized the economic rationale of bringing defaulters back into formal compliance. The Bench cited the revenue’s benefit from such regularization, provided the petitioner clears all pending returns and dues.

Judgment (Paras 11–13)

The Court set aside both the cancellation order (07.11.2022) and the appellate rejection (13.08.2024), directing the petitioner to:

• File all pending GST returns for the cancelled period, and

• Pay a cost of ₹50,000 to the department.

Upon compliance, the authorities were instructed to consider revocation of registration. The order was clarified to apply in the peculiar facts of the case only. The writ petition was accordingly allowed and disposed of.

Between Fine Lines

The ruling underscores a pragmatic judicial approach—balancing strict compliance with economic rehabilitation. It highlights that small taxpayers facing genuine hardship may be allowed restoration of registration if they demonstrate intent to regularize liabilities, pay costs, and contribute to revenue flow.

Summary of Cited References

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