Article explains Who can cancel the GST Registration, Reason for cancellation of GST registration, Procedure for cancellation of the registration, Cancellation of GST registration by tax officer, Liabilities arise on a registered person due to cancellation of GST registration and Revocation of Cancellation of registration.

Cancellation of GST Registration

Who can cancel the GST Registration -?

The cancellation of GST Registration can either be initiated by

  • The department on their own motion or
  • The registered person can apply for the cancellation of their registration.
  •  In case of the death of the registered person, the legal heirs can apply for cancellation.
  • On cancellation of the registration, the person has to file a return which is called the final return.

Cancellation of Registration - One hand is holding document, another hand is crossing out text content with red pen

Reason for cancellation of GST registration.

The registration can be cancelled for the following possible reasons:-

(a) A person registered under any of the existing laws, but who is not liable to be registered under the GST Act

(b) The business has been discontinued, transferred fully for any reason including death of the proprietor, amalgamated with other legal entity, demerged or otherwise disposed of

(c) There is any change in the constitution of the business

(d) The taxable person (other than the person who has voluntarily taken registration under sub-section (3) of section 25 of the CGST Act, 2017) is no longer liable to be registered

(e) A registered person has contravened such provisions of the Act or the rules made thereunder

(f) A person paying tax under the Composition levy has not furnished returns for three consecutive tax periods

(g) Any registered person, other than a person paying tax under Composition levy has not furnished returns for a continuous period of six months

(h) Any person who has taken voluntary registration under subsection (3) of section 25 has not commenced business within six months from the date of registration

(i) Registration has been obtained by means of fraud, wilful misstatement or suppression of facts

Procedure for cancellation of the registration-

Cancellation by taxpayer’s own

  • Any person who wants to apply for cancellation of his registration is required to make an application for cancellation in form GST REG-16.
  • The following details must be included in form GST REG 16-

a. Details of inputs, semi-finished, finished goods held in stock on the date on which cancellation of registration is applied

b. Liability thereon

c. Details of the payment

  • The proper officer (the Superintendent of Central Tax) has to issue an order for cancellation of registration in form GST REG-19 within 30 days from the date of application.
  • The cancellation will be effective from a date determined by the officer and he will notify the taxable person directing him to pay arrears of any tax, interest or penalty if any.

Cancellation of GST registration by tax officer-

8. In the event, the Superintendent of Central Tax has reasons to believe that the registration of a person is liable to be cancelled,

9. May issue a notice to such person in FORM GST REG-17, Requiring him to show cause, within a period of seven working days from the date of the service of such notice, as to why his registration shall not be cancelled; will be issued.

10. The reply to the show-cause notice issued has to be furnished by the registered person in FORM REG–18 within a period of seven working days.

11. In case the reply to the show-cause notice is found to be satisfactory, the Superintendent of Central Tax will drop the proceedings and pass an order in FORM GST REG –20.

12. If the registration is liable to be cancelled, the proper officer will issue an order in form GST REG-19. The order will be sent within 30 days from the date of reply to the show cause.

***The registration can be cancelled, if the taxpayer-

A. Does not conduct any business from the declared place of business OR

B. Issues invoice or bill without supply of goods/services (i.e., in violation of the provisions) OR

C. Violates the anti-profiteering provisions (for example, not passing on the benefit of ITC to customers) OR

With effect from 1st January 2021-

D. The utilisation of ITC from electronic credit ledger to discharge more than 99% of the tax liability for specified taxpayers violating Rule 86B – with the total taxable value of supplies exceeding Rs.50 lakh in the month, with some exceptions. Or

E. A taxpayer who cannot file GSTR-1 due to GSTR-3B not being filed for more than two consecutive months (one quarter for those who opt into the QRMP scheme)  OR

F. Avails input tax credit in violation of the provisions of section 16 of the Act or the rules.

Liabilities arise on a registered person due to cancellation of GST registration-

The registered person whose registration is cancelled shall pay an amount, by way of debit in the electronic credit ledger or electronic cash ledger-

  • Equivalent to the credit of input tax in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock or capital goods or plant and machinery on the day immediately preceding the date of such cancellation

Or

  • The output tax payable on such goods, whichever is higher

In the case of capital goods or plant and machinery, the taxable person shall pay an amount equal to

  • The input tax credit is taken on the said capital goods or plant and machinery, reduced by such percentage points as may be prescribed

Or

  • The tax on the transaction value of such capital goods or plant and machinery under section 15, whichever is higher.

Final Returns:

When the registration of a registered person other than-

  • an Input Service Distributor or
  • a non-resident taxable person or
  • a person paying tax under the composition scheme or TDS/TCS;

Has been cancelled,

The person has to file a final return within three months-

1. Of the date of cancellation or

2. date of order of cancellation,

Whichever is later, electronically in FORM GSTR-10 through the common portal either directly or through a Facilitation Centre notified by the Commissioner.

Revocation of Cancellation of registration:

1. When the registration has been cancelled by the Proper Officer (Superintendent of Central Tax) on his own motion and not on the basis of an application, then the registered person, whose registration has been cancelled, can submit an application for revocation of cancellation of registration, in FORM GST REG-21, to the Proper Officer (Assistant or Deputy Commissioners of Central Tax), within a period of thirty days from the date of the service of the order of cancellation of registration at the common portal, either directly or through a Facilitation Centre notified by the Commissioner:

2. However, if the registration has been cancelled for failure to furnish returns, an application for revocation shall be filed, only after

1. Such returns are furnished and

2. Any amount due as tax, in terms of such returns, has been paid along with any amount payable towards interest, penalty and late fee in respect of the said returns.

On examination of the application if the Proper Officer (Assistant or Deputy Commissioners of Central Tax) is satisfied, for reasons to be recorded in writing, that there are sufficient grounds for revocation of cancellation of registration, then he shall revoke the cancellation of registration by an order in FORM GST REG-22 within a period of thirty days from the date of the receipt of the application and communicate the same to the applicant.

However, if on examination of the application for revocation, if the Proper Officer (Assistant or Deputy Commissioners of Central Tax) is not satisfied then he will

1. issue a notice in FORM GST REG– 23 requiring the applicant to show cause as to why the application submitted for revocation should not be rejected and

2. The applicant has to furnish the reply within a period of seven working days from the date of the service of the notice in FORM GST REG-24

3. Upon receipt of the information or clarification in FORM GST REG24, the Proper Officer (Assistant or Deputy Commissioners of Central Tax) shall dispose of the application within a period of thirty days from the date of the receipt of such information or clarification from the applicant.

4. if the proper officer is not satisfied with the clarification given in REG-24, the applicant will be mandatorily given an opportunity of being heard,

5. After recording the reasons in writing May by an order in FORM GST REG- 05, reject the application for revocation of cancellation of registration and communicate the same to the applicant.

6. The revocation of cancellation of registration under the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act 2017, as the case may be, shall be deemed to be a revocation of cancellation of registration under the Central Goods and Services Tax Act.

Author Bio

Qualification: CA in Practice
Company: Tanwar Ratan Singh & Associates
Location: Bhilwara, Rajasthan, India
Member Since: 20 Aug 2021 | Total Posts: 1
Practicing chartered accountant as designated partner @ Tanwar Ratan Singh & Associates, having expertise in the area of goods and service tax, income tax, concurrent audit, accounting, auditing & assurance. View Full Profile

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