The registration granted under GST can be cancelled for specified reasons. The cancellation can either be initiated by the department or the registered person or the legal heirs in case of death of registered person. In case the registration has been cancelled by the department there is a provision for revocation of the cancellation of the registration.

In this article, we will discuss about the process of cancellation & revocation of GST Registration.

Circumstances for Cancellation of GST Registration

By the Taxpayer or his heirs or suo-motu where:

  • The taxable person was registered under any of the earlier laws (Excise, VAT etc), but is not liable to be registered under the GST Act, or
  • The business has been discontinued or transferred for any reason including death or amalgamated or demerged or disposed of, or
  • There is any change in the constitution of the business, or
  • The taxable person, other than the registered person having voluntarily registration u/s 25(3) is no longer liable to be registered u/s 22 or Sec 24

By the Proper Officer where:

The registered person has contravened the provisions of the act or the rules made thereunder as may be prescribed, or

  • The Composition dealer has not furnished the return for 3 consecutive tax period, or
  • The registered person (other than composition dealer) has not furnished return for a continuous period of 6 months, or
  • The voluntarily registered person has not started the business within 6 months from the date of registration, or
  • Registration has been obtained by means of fraud/wilful misstatement or suppression of facts.

Procedure for GST Registration Cancellation:

1. If the proper officer has reasons to believe that the registration of a person is liable to be cancelled, he shall send a show cause notice to such person in FORM GST REG-17

2. The reply to the show cause notice issued has to be furnished by the registered person in FORM GST REG–18 within a period of seven working days stating as to why his registration should not be cancelled.

3. In case the reply to the show cause notice is found to be satisfactory, the proper officer shall drop the proceedings and pass an order in FORM GST REG-20. However if the reply is not satisfactory and the registration is liable to be cancelled,  the proper officer will issue an order in FORM GST REG-19, within a period of thirty days from the date of application or the date of the reply to the show cause received and notify such person, directing him to pay arrears of any tax, interest or penalty.

4. 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.

5. 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.

6. The cancellation of registration shall not affect the liability of the person to pay tax and other dues 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.

Notes:

  • During the pendency of the proceedings relating to cancellation of registration, the proper office may suspend the registration for such period and in such manner as may be prescribed
  • Registered person whose registration has been suspended, shall not be required to furnish any return.

Final Returns (GSTR-10):

When the registration of a registered person other than

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.

Penalty for late-filing: In case of late filing of GSTR-10, a notice is issued to the corresponding taxpayer granting 15 days time to file the return. In case the taxpayer fails to comply, the tax officer would pass the cancellation order with the tax payable along with interest or penalty.

Revocation of cancellation of GST registration:

1. The Registered person whose registration has been cancelled by the proper officer on his own motion, 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 of from the date of service of the order of cancellation via the common portal.

2. However, if the registration has been cancelled for failure to furnish returns, application for revocation shall be filed, only after such returns are furnished and any amount due as tax has been paid along with any interest, penalty or late fees.

3. On examination of the application, if the Proper Officer is satisfied 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.However, if the proper officer is not satisfied, he will 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 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.

4. Upon receipt of the reply, the Proper Officer, if satisfied, shall dispose the application within a period of thirty days from the date of receipt of the reply. In case it is not satisfactory the applicant will be mandatorily given an opportunity of being heard, after which the Proper Officer 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.

Additional Information:

Many cases have come to the knowledge of the department wherein new registration have been applied after cancelling their old registration on account of non-filing of their returns and not complying with the statutory compliances. In this respect, the CBIC vide Circular No. 95/14/2019-GST dt 28th March, 2019, has clarified the Consequences the taxpayer has to face in case of Non-Revocation of cancelled registration and applying for a New Registration. The extracts are provided for your reference:

  • It is instructed that proper officer may exercise due caution while processing the application for registration, where the tax payer is seeking another registration within the State although he has an existing registration within the said State or his earlier registration has been cancelled.
  • PO may compare the information of earlier registrations and present application, the grounds of cancelled and the current status of violations for which the earlier registration were cancelled.
  • The data may be verified on common portal by fetching the details of registration taken on the PAN mentioned in the new application vis-a-vis cancellation of registration obtained on same PAN.
  • Further, if required, information submitted by applicant regarding details of proprietor, all partner/Karta/Managing Directors etc. may be analysed.
  • If PO finds that application for revocation of cancellation of registration has not been filed and the conditions of non-filing of returns are still continuing, then, the same may be considered as a ground for rejection of application for registration.

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