Q.1 What are the circumstances in which GST registration can be cancelled?

Subsection 1 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 Sec. 29

A registration granted can be cancelled by the proper officer, either on his own or 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; (For example- Private limited company has changed to a public limited company) 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 made under subsection  (3) of section 25.

Provided that during 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 Inserted vide The Central Goods & Services Tax Amendment Act, 2018 w.e.f 01.02.2019

FAQ's on Cancellation of GST Registration

Q.2 When the proper office may cancel the registration?

Subsection 2 The proper officer may cancel the registration of a person from such date, including any retrospective date, as he may deem fit, where, ––

(a) a registered person has contravened such provisions of the Act or the rules made thereunder as may be prescribed; or

(b) a person paying tax under section 10 has not furnished returns for three consecutive tax periods; or

(c) any registered person, other than a person specified in clause (b), has not furnished returns for a continuous period of six months; or

(d) any person who has taken voluntary registration under sub-section (3) of section 25 has not commenced business within six months from the date of registration;

or

(e) registration has been obtained by means of fraud, wilful misstatement or suppression of facts:

Provided that the proper officer shall not cancel the registration without giving the person an opportunity of being heard:

[Provided further that during pendency of the proceedings relating to cancellation of registration, the proper officer may suspend the registration for such period and in such manner as may be prescribed].

Inserted vide The Central Goods & Services Tax Amendment Act, 2018 w.e.f 01.02.2019

Q.3 Is the cancellation of Reg. affect the liability?

Subsection 3 No, The cancellation of registration under this section shall not affect the liability of the person to pay tax and other dues under this Act or to discharge any obligation under this Act or the rules made thereunder- for any period prior to the date of cancellation whether or not such tax and other dues are determined before or after the date of cancellation.

Q.4 Is the cancellation deemed to be affect in all act of GST?

Subsection 4 Yes, The cancellation of registration under the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act, as the case may be, shall be deemed to be a cancellation of registration under this Act.

Q.5 What will be liability of GST reversal in case of GST Registration cancellation?

Subsection 5 Every 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, calculated in such manner as may be prescribed:

Provided that 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 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.

Q.6 What will be the manner of calculation of amount payable  u/s/s  5 ?

Subsection 6  The amount payable under sub-section (5) shall be calculated in such manner as may be prescribed.

Q.7 What is the Process for Application for cancellation of GST Registration cancellation?

Rule 20

A registered person, other than a person to whom a registration has been granted under rule 12 or a person to whom a Unique Identity Number has been granted under rule 17, 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 and may furnish, along with the application, relevant documents in support thereof, at the common portal within a period of thirty days of the occurrence of the event warranting the cancellation, either directly or through a Facilitation Centre notified by the Commissioner.

[Provided that no application for the cancellation of registration shall be considered in case of a taxable person, who has registered voluntarily, before the expiry of a period of one year from the effective date of registration.] Omitted vide Notf no. 03/2018-CT dt. 23.01.2018

Q.8 In what cases GST Registration to be cancelled by Proper officer?

Rule 21

Registration to be cancelled in certain cases

The registration granted to a person is liable to be cancelled, if the said person,-

(a) does not conduct any business from the declared place of business; or

(b) issues invoice or bill without supply of goods or services in violation of the

provisions of this Act, or the rules made thereunder; or

[(c) violates the provisions of section 171 of the Act or the rules made thereunder. i.e Violates the anti-profiteering provisions (for example, not passing on benefit of ITC to customers)]- Inserted vide Notf no. 07/2017-CT dt. 27.06.2017 ;or

[(d) violates the provision of rule 10A. i.e requirement of furnishing of the bank account details under GST]-Inserted vide Notf no. 31/2019 – CT dt. 28.06.2019 With effect from 1st January 2021-

(e) 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

(f) 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

(g) Avails input tax credit in violation of the provisions of section 16 of the Act or the rules.

Q.9  What is Suspension of GST Registration and when this Rule inserted ?

Inserted vide Notf no. 03/2019-CT dt. 29.01.2019 wef 01.02.2019

Rule 21A  (1) Where a registered person has applied for cancellation of registration under rule 20, 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 under section 29 or under rule 21, he may, after affording the said person a reasonable opportunity of being heard, 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 under rule 22.

(3) A registered person, whose registration has been suspended under sub-rule (1) or subrule (2), shall not make any taxable supply during the period of suspension and shall not be required to furnish any return under section 39.

[Explanation.-For the purposes of this sub-rule, the expression “shall not make  any taxable supply” shall mean that the registered person shall not issue a tax invoice suspension].-Inserted vide Notf no. 49/2019-CT dt. 09.10.2019

(4) The suspension of registration under sub-rule (1) or sub-rule (2) 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.]

[(5) Where any order having the effect of revocation of suspension of registration has been passed, the provisions of clause (a) of sub-section (3) of section 31 and section 40 in respect of the supplies made during the period of suspension and the procedure specified therein shall apply].-Inserted vide Notf no. 49/2019-CT dt. 09.10.2019

Q.10 What is the Process of cancelling of GST Registration by Proper officer ?

Rule 22

(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 sub-rule (1) shall be furnished in FORM GST REG–18 within the period specified in the said sub-rule.

(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 under rule 20  ([sub-rule (1) of] rule 20  Omitted vide Notf no. 7/2017-CT dt. 27.06.2017)  or, as the case may be, the date of the reply to the show cause issued under sub-rule (1), 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.

(4) Where the reply furnished under sub-rule (2) is found to be satisfactory, the proper officer shall drop the proceedings and pass an order in FORM GST REG–20:

[Provided that where the person instead of replying to the notice served under subrule  (1) for contravention of the provisions contained in clause (b) or clause (c) of subsection (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.]-Inserted vide Notf no. 39/2018-CT dt. 04.09.2018

(5) The provisions of sub-rule (3) shall, mutatis mutandis, apply to the legal heirs of a deceased proprietor, as if the application had been submitted by the proprietor himself

Q.11 What is final return and when it to be filed after cancellation?

As per section 45 i.e Final return, “every registered person who is required to furnish a return under sub-section (1) of section 39 and whose registration has been cancelled shall furnish online on the GST Portal, a final return “within three months” of the date of cancellation or date of order of cancellation, whichever is later, in GST FORM GSTR-10 as specified in Rule 81”

Q.12 What are the relevant form for GST Registration cancellation?

Form No Filed By Description
 REG-16 For Taxpayer Application for Cancellation of Registration
 REG -17 For Tax Official Show Cause Notice for Cancellation of Registration
 REG -18 For Taxpayer Reply to the Show Cause Notice issued for cancellation for registration
 REG-19 For Tax Official Order for Cancellation of Registration
 REG-20 For Tax Official Order for dropping the proceedings for cancellation of registration

Q.13 In case a person whose turnover not exceed threshold limit but  taken GST Registration can apply for cancellation?

Yes, can apply after Notf no. 03/2018-CT dt. 23.01.2018, Earlier, such person could not apply for cancellation before expiry of one year from the effective date of registration.

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