Cancellation, Suspension & Revocation of Registration under GST

Introduction

Cancellation of GST Registration describes that the taxpayer will no longer be a GST Registered Person and they will no longer have to pay or collect the taxes. The cancellation can be due to closure/transfer/change in the constitution of business. In case of death of registered person, in case of proprietorship concern, the legal heirs can apply for cancellation.

In case the registration has been cancelled by the department there is a provision for revocation of the cancellation at the request of the taxpayer. On cancellation of the registration the person has to file a return which is called the final return within 3 months of cancellation of GST Registration.

Cancellation of GST is of two types:

1. Cancellation by the Proper Officer on their own motion or

2. Cancellation by the Taxpayer suo-motu.

Circumstances under which GST Registration can be cancelled:

1. If the registered person:

• does not conduct any business from the place of business.
• is no longer liable to be registered or intends to opt out of the voluntary registration
• issues invoice or bill without supply of goods or services or both in violation of the provisions of this Act, or the rules made thereunder
• violates the provisions of Section 171 (Anti-profiteering Measure) of the Act or the Rules made thereunder
• violates the provision of Rule 10A (Furnishing of Bank Account Details)
• avails input tax credit in violation of the provisions of Section 16 of the Act or the Rules made thereunder
• furnishes the details of outward supplies in FORM GSTR1 under Section 37 for one or more tax periods which is in excess of the outward supplies declared by him in his valid return i.e. FORM GSTR-3B under Section 39 for the said tax periods
• violates the provision of Rule 86B (Output Tax Liability can be set off using the electronic credit ledger only upto the extent of 99% of the said liability where the value of taxable supply in a month exceeds Rs. 50 lakhs)
• a person paying tax under Composition Levy has not furnished returns for three consecutive tax periods
• other than a person paying tax under Composition Levy, has not furnished returns for a continuous period of six months
• who has taken voluntary registration under sub-section (3) of Section 25 has not commenced business within six months from the date of registration

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

3. There is any change in the constitution of the business

Reversal of Input Tax Credit on stock or capital goods or plant & machinery on cancellation of registration

Every registered person whose registration is cancelled shall pay an amount, by way of debit in the electronic cash/credit ledger, equivalent to-

• The credit of the input tax in respect of goods 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, calculated in manner as prescribed in Rule 44.

However, in case of capital goods or plant and machinery, the taxable person shall pay an amount equal to the input tax credit taken on the said capital goods or plant and machinery, reduced by 5% points per quarter or part thereof as given in Rule 44 or the tax on the transaction value of such capital goods or plant and machinery under Section 15, whichever is higher.

Procedure for Cancellation of Registration:

Voluntary Cancellation

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 on the portal within a period of 30 days of the occurrence of the event warranting the cancellation, 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.

The registration is 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.

Suo-Motu Cancellation

1. Where the proper officer has reasons to believe that the registration of a person is liable to be cancelled, a notice to such person in FORM GST REG-17, requiring him to show cause, within a period of 7 working days from the date of the service of such notice, as to why his registration shall not be cancelled will be issued.

2. 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

3. In case the reply to the show cause notice is found to be satisfactory, the proper officer will drop the proceedings and pass an order in FORM GST REG –20. Where the person instead of replying to the notice for contravention of the provisions contained in clause (b) or clause (c) of sub-Section (2) of Section 29, furnishes all the pending returns and makes full payment of the tax dues along with applicable interest and late fee, the proper officer shall drop the proceedings and pass an order in FORM GST-REG 20

Suspension of GST Registration

Voluntary Suspension

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.

Suspension by Proper Officer

Where the proper officer has reasons to believe that the registration of a person is liable to be cancelled under Section 29, he may suspend the registration of such person with effect from a date to be determined by him, pending the completion of the proceedings for cancellation of registration. However, before suspension of registration, a reasonable opportunity of being heard must be provided to the registered person.

Duties of Registered Person during suspension

• A registered person, whose registration has been suspended shall not make any taxable supply (i.e. not issue a tax invoice and, accordingly, not charge tax on supplies made by him) during the period of suspension and shall not be required to furnish any return under Section 39.
• A registered person, whose registration has been suspended shall not be granted any refund during the period of suspension of his registration

Deemed Revocation of suspension of Registration

The suspension of registration shall be deemed to be revoked upon completion of the proceedings for cancellation of registration by the proper officer and such revocation shall be effective from the date on which the suspension had come into effect. However, the suspension of registration may be revoked by the proper officer, anytime during the pendency of the proceedings for cancellation, if he deems fit.

Where the registration has been suspended either for not filing a return for a financial year by a composition supplier beyond 3 months from the due date of furnishing of relevant return or for not filing return for a continuous period for other than registered person and the registration has not already been cancelled by the proper officer, the suspension of registration shall be deemed to be removed upon furnishing of all pending returns.

Consequences after passing an order for revocation of suspension of registration

Where any order having the effect of revocation of suspension of registration has been passed, the registered person has to issue a revised invoice within one month in respect of the supplies made during the period of suspension, and declare the same in the first return furnished by him after revocation of suspension of registration.

Final Return

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 of the date of cancellation or date of order of cancellation, whichever is later, electronically in FORM GSTR-10 through the common portal.

Revocation of Cancellation of Registration

Any registered person,  whose registration has been cancelled by the proper officer on his own motion and not on the basis of an application by the registered person, then the registered person can submit an application for revocation of cancellation of registration, in FORM GST REG-21, to the 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.

However, the period of 30 days can be extended by:

• by the Additional Commissioner or the Joint Commissioner, as the case may be, for a period not exceeding thirty days
• by the Commissioner, for a further period not exceeding thirty days, beyond the period specified above.

The proper officer may in prescribed manner and within prescribed period (30 days from the date of receipt of application), by an order, either revoke cancellation of the registration, or reject the application after giving the applicant an opportunity of being heard.

Deemed Revocation of Cancellation:

No application for revocation shall be filed,

• 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.

Procedure 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.

All Notices, certificates and orders in the above aspects shall be issued electronically by the proper officer or any other officer authorised to issue such notices or certificates or orders, through digital signature certificate or through E-Signature as specified under the provisions of the Information Technology Act, 2000 or verified by any other mode of signature or verification as notified by the Board in this behalf.