Bhatt, who alleged complicity of Gujarat chief minister Narendra Modi in the 2002 riots, was placed under suspension by the home department in exercise of powers conferred by Rule 3(1) of All India Services (Discipline and Appeals) Rules, 1969 on August 8, 2011.
The specific reasons cited against him were unauthorised absence from duty, non-appearance before a departmental panel and alleged misuse of official vehicle while he was posted as SRP training school principal in Junagadh district.
"His suspension has been revoked in this particular case," Nanda said.
"The central review committee which had met on August 6, 2012 was of the opinion that the proposal of the state government for further extension of Bhatt's suspension beyond one year may be rejected," a ministry of home affairs communication sent to Bhatt by the state home department said.
"The state government has considered the recommendations of central review committee carefully and decided to accept the same and revoke suspension of Bhatt with effect from August 8 this year," Nanda said.
However, he remains suspended from the service in a criminal case where he has been accused for forcing his former constable to file a forged affidavit in which he had spend six days in police custody.