Cancellation or Suspension & Revocation of GST Registration

Cancellation of GST Registration means the permanent closure of the GSTIN in some circumstances such as closure/transfer/change in constitution of the business etc. and it can be applied by filing an application on the GST Portal and by the Proper officer Suo-moto in the circumstances such as non-filing of returns, fraud, contravention of provisions of the Act etc.

Cancellation of GSTIN is of two types – 1. Voluntary Cancellation by the Registered Person, 2. Cancellation by the Proper Officer Suo-moto. In this article, we will discuss about both types of cancellation and its impacts. Further, we will discuss the suspension and revocation of cancellation of registration in case the GST Registered Taxpayer want to revoke the cancelled GSTIN in any circumstances.

GST Registration Cancellation by the Proper Officer on his Own Motion

Any registration granted under this Act may be cancelled by the Proper Officer. The various circumstances and the provisions of the law on this subject have been outlined under this section.

The proper officer may cancel the registration from a date, including any retrospective date, in case when –

• the registered taxable person has contravened such provisions of the Act or the rules made thereunder as may be prescribed; or
• a person paying tax under Composition Scheme has not furnished returns for three consecutive tax periods; or
• any registered person who has not furnished returns for a continuous period of six months; or
• any person who has taken voluntary registration and has not commenced business within six months from the date of registration; or
• does not conduct any business from the declared place of business; or
• issues invoice or bill without supply of goods or services in violation of the provisions of this Act, or the rules made thereunder; or
• violates the provisions of Anti-profiteering, or
• where registration has been obtained by means of fraud, willful misstatement or suppression of facts.

GST Registration Cancellation on Voluntary Application by The Taxpayer

A registration granted can be cancelled by the proper officer on application by the registered person when –

• the business is discontinued, transferred fully for any reason including death of proprietor, amalgamated with other legal entity, demerged or otherwise disposed of; or
• there is any change in the constitution of the business; or
• the taxable person is no longer liable to be registered under sections 22 or section 24, or
• intends to opt out of the registration voluntarily.

Process of Cancellation of GST Registration

Rule 22 of the CGST Rules, 2017, provides for process of cancellation of registration and includes the following:

• Cancellation can be done by Proper Officer Suo-moto or on application made by the registered person;
• Retrospective cancellation in case of fraud, wilful misstatement or suppression of fact;
• Liability to pay tax before the date of cancellation will not be affected;
• Notice of hearing and opportunity of being heard is a must before cancellation.

Voluntary GST Registration Cancellation

1. A registered person seeking cancellation of his registration under sub-section (1) of section 29 shall electronically submit an application in FORM GST REG-16, including therein the details of inputs held in stock or inputs contained in semi-finished or finished goods held in stock and of capital goods held in stock on the date from which the cancellation of registration is sought, liability thereon, the details of the payment, if any, made against such liability.

2. Where a person who has submitted an application for cancellation of his registration is no longer liable to be registered or his registration is liable to be cancelled, the proper officer shall issue an order in FORM GST REG-19, within a period of thirty days from the date of application.

3. It should be noted that upon filing of application for cancellation of registration in FORM GST REG-16, the status of GSTIN will be change to “Suspended” till the final order of Cancellation is passed by the PO.

Suo-Moto GST Registration Cancellation Cancellation

1. Where the proper officer has reasons to believe that the registration of a person is liable to be cancelled under section 29, he shall 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.

2. The reply to the show cause notice issued under FORM GST REG-17 shall be furnished in FORM GST REG-18 within the period specified therein.

3. Where a person who has submitted an application for cancellation of his registration is no longer liable to be registered or his registration is liable to be cancelled, the proper officer shall issue an order in FORM GST REG-19, within a period of thirty days from the date of application submitted or the date of the reply to the show cause, cancel the registration, with effect from a date to be determined by him and notify the taxable person, directing him to pay arrears of any tax, interest or penalty including the amount liable to be paid under sub-section (5) of section 29.

Suspension of GST Registration

Suspension of a Registration under GST means to put a temporary hold on the GSTIN till the completion of any proceedings under these Act or rules. CGST (Amendment) Act, 2018 notified with effect from 1st Feb 2019, provided that during the pendency of the proceedings relating to cancellation of registration filed by the registered person, the registration may be suspended for such period and in such manner as may be prescribed.

Section 29 of CGST Act, 2017 and Rule 21A of the CGST Rules, 2017, provides for suspension of registration in the following manner-

1. Where a registered person has applied for cancellation of registration, the registration shall be deemed to be suspended from the date of submission of the application or the date from which the cancellation is sought, whichever is later, pending the completion of proceedings for cancellation of registration under rule 22.

2. Where the proper officer has reasons to believe that the registration of a person is liable to be cancelled, he may he may, after giving the said person a reasonable opportunity of being heard by sending intimation and Show Cause Notice, suspend the registration of such person with effect from a date to be determined by him.

3. A registered person, whose registration has been suspended, shall not make any taxable supply during the period of suspension and shall not be required to furnish any return under section 39.

4. The suspension of registration shall be deemed to be revoked upon completion of the proceedings by the proper officer under rule 22 and such revocation shall be effective from the date on which the suspension had come into effect.

The government has further amended Rule 21A vide Notification 94/2020-Central Tax dated: 22.12.2020, to take action against serious misreporting in GSTR-1, 2B and GSTR-3B.

The amendments made vide the said notification are as below:

Rule 21A(2A): A new sub-rule 2A has been inserted which states that if a proper officer finds any discrepancies:

1. On comparing details of outward supplies furnished under Form GSTR-1 and Form GSTR-3B

2. On comparing details of inward supplies reflecting in the Form GSTR-2B with the Form GSTR-3B.

He can issue FORM GST REG-31 for intimating such discrepancies to the taxpayer on the portal or by communication on the registered email-id. He will also mention that if a proper explanation is not provided on these discrepancies within the time frame, the registration may be cancelled.

Further, He can also suspend the registration as per Rule 21A (2A) with effect from the date of his communication to the taxpayer. And the proper officer can lift the suspension on receiving a satisfactory reply from the taxpayer.

So, the registration of a taxpayer is cancelled only upon passing of the cancellation order by the Jurisdictional Officer. Earlier, the tax payer is required to file Nil returns till the order of cancellation passed by the officer else daily penalties will accrue to him. But, to ensure that the tax payer who have applied for cancellation of registration are not burdened with return filing, amendments have been made to section 29 of the CGST Act to change the status of registration to “suspended” while any proceedings for cancellation is pending.

Once the officer changes the status of the registration to “suspended”, the tax payer would not be required to file the GST returns till the order for cancellation has been passed and once the order for cancellation is passed, the tax payer can file the final return and complete the other formalities.

REVOCATION OF CANCELLATION OF REGISTRATION

Revocation is “the official cancellation of an order or a decision”. So, in the contrast of revocation of cancellation of registration under GST, it is meaning thereby to the official cancellation of an order of the proper officer for cancellation of GST Registration on his own motion.

Any registered taxable person, whose registration is cancelled by the Proper Officer on his own motion, may apply to proper officer for revocation of cancellation of the registration within 30 days from the date of service of the cancellation order. The proper officer may in prescribed manner and within prescribed period, by an order, either revoke cancellation of the registration, or reject the application for revocation for good and sufficient reasons.

Process for Revocation of Cancellation of GST Registration

1. A registered person, whose registration is cancelled by the proper officer on his own motion, may submit an application for revocation of cancellation of registration, in FORM GST REG-21, to such proper officer, within a period of thirty days from the date of the service of the order of cancellation of registration at the common portal.

2. Where the proper officer is satisfied, for reasons to be recorded in writing, that there are sufficient grounds for revocation of cancellation of registration, 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.

3. The proper officer may, for reasons to be recorded in writing, reject the application for revocation of cancellation of registration by an order in FORM GST REG-05. But the proper officer shall, before passing the order in FORM GST REG-05, 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 the applicant shall furnish the reply within a period of seven working days from the date of the service of the notice in FORM GST REG-24. 

4. Upon receipt of the information or clarification in FORM GST REG-24, the proper officer shall proceed to dispose of the application in the manner specified in sub-rule (2) within a period of thirty days from the date of the receipt of such information or clarification from the applicant.

Important points to be noted for revocation of registration:

• if the registration has been cancelled for the failure of the registered person to furnish returns, unless such returns are furnished and 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.
• all returns due for the period from the date of the order of cancellation of registration till the date of the order of revocation of cancellation of registration shall be furnished by the said person within a period of thirty days from the date of order of revocation of cancellation of registration:
• where the registration has been cancelled with retrospective effect, the registered person shall furnish all returns relating to period from the effective date of cancellation of registration till the date of order of revocation of cancellation of registration within a period of thirty days from the date of order of revocation of cancellation of registration

FAQs on Cancellation or Suspension and Revocation of GST Registration

Q1. In case of a person whose turnover does not exceed the threshold limit but has obtained registration Voluntarily can apply for cancellation of Registration?

Yes, a person whose turnover does not exceed the threshold limit but has obtained registration voluntarily may also cancel registration any time during the year. This provision has been introduced vide Notification No. 3/2018–Central Tax, date Dated 23^rd January 2018. Earlier, such person could not apply for cancellation before expiry of one year from the effective date of registration.

Q2. Is there any liability on the taxpayer once the registration is cancelled?

Where the registration is cancelled, the registered taxable person shall pay an amount 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 on the day immediately preceding the date of such cancellation or the output tax payable on such goods, whichever is higher. The payment can be made by way of debit in the electronic credit or electronic cash ledger.

In case of capital goods, the taxable person shall pay an amount equal to the input tax credit taken on the said capital goods reduced by the prescribed percentage points or the tax on the transaction value of such capital goods, whichever is higher. The amount payable under these provisions shall be calculated in accordance with rule 44 of CGST Rules.

Q3. What are the final formalities to be done after cancellation of Registration?

The supplier whose registration is cancelled he will be required to file his Final Return in FORM GSTR-10 so as to complete cancellation of registration effectively. It must be filed within three months from the date of cancellation or date of cancellation order whichever is later.

Q4. What are the situation when a person can apply for a revocation of registration?

Revocation of a registration can be applied when the registration is cancelled by the proper officer on his own motion due to any of the reasons mentioned above. Further, a person who has applied for a voluntary cancellation cannot apply for a revocation of registration in any case.

Q5. What is the consequences of Suspension of Registration?

The person shall not make any taxable supply during the period of suspension and shall not be required to furnish any return under section 39. The person can issue a revised invoice for the supplies

Author’s Remark:-

In this article, we discussed the provisions of Cancellation/Suspension and Revocation of GSTIN in various cases. The Department has cancelled the GSTIN during the Financial Year 2020-21 due to the non-filing of returns, not working from the registered office & failed in physical verification of registered office and documents after granting of registration etc., But, the taxpayer whose registration is cancelled by the Proper officer can be revoked by following the above procedure and by discharging the pending liabilities, if any.

Further, after amendment of Section 29 of CGST Act, now the option of suspension is introduced where the proper officer have the power to suspend the registration during the pendency of any proceedings under the GST Act, which means the Proper Officer will not cancel the registration directly, rather he will provide an opportunity to provide a clarifications or to file the replies and the GSTIN will be revoked upon satisfactory replies. Upon filing of application by the taxpayer for cancellation, the GSTIN will be suspended till the final order will be passed. During this period.

Disclaimer:-  The above information is purely and solely for informative purposes. This in no way should be construed to be any professional advice, as these are merely general information and our interpretations of the laws and the Act. Viewers are requested to consult us before taking any action based on our interpretations. Circulation of any information in our name without our permission is not allowed.

The author may be reached at: csmalkitsingh@gmail.com or +91-9711975109