GST Registration Cannot be in Suspended State Indefinitely

The following issues emanate therefrom:

• How can the cancellation proceedings be concluded if the registered person belatedly replies to the show-cause notice?
• What if the assessee altogether fails to reply to the show-cause notice?

In the instant case[1], the proper officer suspended the registration. The registered person belatedly filed the reply to show-cause notice. The proper office too did not issue the order concluding the cancellation proceedings within the prescribed time-limit.

The Hon’ble High Court of Rajasthan, vide its order dated July 05, 2021, observed that suspension of registration brings the entire business to a standstill. Suspension of registration is worse than cancellation. At least, against cancellation of registration, the assessee can resort to legal remedies. On the other hand, against suspension pending an enquiry, the tax authorities or the Court(s) would usually exhibit reluctance even if the assessee chooses to approach them.

Importantly, the Hon’ble Court observed that cancellation proceedings cannot be pending even if the assessee failed to file reply to the show-cause notice within the prescribed period.

[1] S.B. Civil Writ Petition No.7463 of 2021