Cancellation of Registration under GST

Hello friends  greetings for the day, in the current article we will discuss reasons for cancellation and the process for cancellations of GST registration and the due course with its effects. The registration granted under GST  can be cancelled due to various reasons like death of registered person and the legal heir can apply for cancellation of the registration. Initiation of cancellation of registration can be done on the part of department as well on own motion/sue-moto. On cancellation of the registration the person has to file a return which is called the “Final Return”.

Reasons for cancellation of registration granted under GST:-

• Person was registered under VAT, Service tax , Excise etc however the registered person is not required to get registered under GST .
• Change in the constitution of business.
• The business has been discontinued or transferred due to death of proprietor, amalgamation with other legal entity, demerged etc
• The taxable person is no longer liable to get registered however there is an exception of the person who has voluntarily taken registration under 25(3) of CGST Act.
• Registered person who has taken voluntary registration under 25(3), but has not commenced business within “6 Months” from the date of registration.
• Any registered person who has contravened such provisions of the act or the rules made there under .ie  CGST Act, IGST Act ,UTGST Act ,SGST Act( According to the state) or the rules made there under.
• A registered person opting for “Composition scheme” has not furnished return for a “continuous period of 6 Months “.
• Registration obtained by means of fraud , willful misstatement or suppression of facts.

GST Registration Cancellation Procedure:-

• A person already registered under any of the existing laws (Central excise, Service tax, VAT etc.), but who is not required to be registered under GST .Then he has to  submit an application electronically by 31^st March 2018, in form GST REG-29 at the common portal and proper officer shall after conducting such inquiry cancel the registration as per rule 24 of CGST Rules.
• The important point to be noted that the cancellation of registration under State Goods and service tax or the Union Territory Goods and service tax as the case may be the it shall be deemed to be a cancellation of registration under CGST.
• As per rule 22 of CGST Rules 2017, The superintendent of central tax has reason to believe that the registration of a person is liable to be cancelled the he will issue “Show cause notice” to such person in the form of FORM GST REG-17, requiring him to reply within “Seven” working days from the date of service of show cause notice. The reply of GST REG-17 has to be made by FORM GST REG-18 within seven working days.Where the reply furnished by the registered person is found to be satisfactory then the superintendent shall drop the proceeding and pass an order in FORM GST REG-20
• 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 sub-rule (1) of rule 20 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 subsection (5) of section 29.

Payment to be made on GST Registration cancellation

• As per 29(5) of CGST Act 2017, 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 short it can be said that Higher of “Input tax credit” or Output tax liable to be paid on such goods. So in the case of voluntary cancellation of registration of it should be ensured that goods are sold otherwise after cancellation is initiated the registered person would not be able to claim Input tax credit and he has to pay higher or input tax credit or Output tax.
• 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. It means that cancellation of registration under would not mean indemnity from taxes or other dues liable to be paid prior to the date of cancellation of registration. Proper officer has all the rights to open the case for scrutiny for the prior period.

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 either directly or through a Facilitation Center notified by the Commissioner.

REVOCATION OF CANCELLATION OF REGISTRATION UNDER GST

• 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 either directly or through a Facilitation Center.
• If the registration has been cancelled due to non filling of return, application for revocation can only be sent only after all the pending returns are being filled along with any amount payable towards Interest, penalty and late fee in respect of the said return.
• Proper officer (Assistant or Deputy commissioner) after examining the application if proper officer is satisfied , for the reasons to be recorded in writing that there are sufficient ground to revoke the cancellation of registration than he shall revoke the cancellation of registration by the order in FORM GST REG- 22 within a period of 30 Days from the date of receipt of application communicating the same to the applicant.
• In case PO is not satisfied then he will issue notice for show cause to the applicant in the FORM GST REG-23, requiring the applicant to reply within Seven working days that why the application submitted for revocation should not be rejected and applicant has to furnish his reply in the FORM GST REG-24.and applicant will be given chance for an opportunity to being heard after that proper officer shall reject the application for revocation.
• On receipt of form REG-24, the Proper office(Assistant or Deputy commissioner) shall dispose of the application within the period of 30 Days from the date of receipt of such information or clarification from the applicant.
• In case the information or clarification to PO is found to be satisfactory then the PO shall dispose of the application as per point 3 above

• Revocation or cancellation of registration under SGST OR UTGST shall be deemed to be taken place under CGST as well.