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Dear readers, as we all know, COVID-19 is becoming a big enemy of whole business community. Due to lockdown, small dealers are suffering the most because they are not able to open their shops and due to cash crunch situation they are not able to file their GST Returns because they have no funds to make GST Payment.

In many cases, it is observed that, small dealers have not filed their GST returns from February, 2020 onwards. The GST Department has also given some relaxation in compliances related to GST Return filing. They have given opportunity to GST Dealers to file their pending GST Returns without late for the Month of February, March, April and May 2020 before the specified dates in the Month of June 2020. If the dealers file their GST returns after that specified dates, then they have to pay GST return late filing fee of Rs.20/50 per day as applicable.

But due to shortage of funds, many small traders may not able to file their GST Returns within that specified period. In this article, I am trying to elaborate the consequences which may arise if dealer does not file returns for continuous Six months along with solution of the problem.

Problems which may arise, if GST Returns are not filed:

√ Dealer has to pay GST Return late filing fee of Rs.20/50 per day as applicable in their case

√ E-Way bill generation facility will be blocked

√ And the most dangerous is Suo Motto Cancellation of GST Registration by department

Section 29 (2) of CGST Act, 2017 empowers, GST officer to 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 (i.e Composition levy) has not furnished returns for 3 consecutive tax periods; or

(c) any registered person, other than composition registered dealer who has not furnished returns for a continuous period of 6 months; or

(d) any person who has taken voluntary registration under sub-section (3) of section 25 has not commenced business within 6 months from the date of registration (i.e filing Nil GST Returns); or

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

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

As observed in many cases, reasons for cancellation of GST Registration of maximum dealers are due to conditions specified in clause (c), (d) and (e) above.

Before cancellation of GST Registration, GST Officer is under obligation to issue a show-cause notice in Form GST REG-17, specifying the reason why, GST registration should not be canceled and registered dealer has to reply for the same within the specified time period.

Now the dealer is under obligation to submit his reply to show cause notice in Form REG-18 within specified time period.

If registered dealer do not reply to this show cause notice or fails to correct the identified error as mentioned in Show cause notice, GST officer cancels the GST Registration and issue GST Cancellation Order in FORM GST REG-19 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

Caution:  If your GST Registration is Suo-Motto cancelled by GST Department, then it does not mean that you are free from all legal consequences of defaults done prior to date of cancellation.

As per Section 29 (3) of CGST Act, 2017, 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 there under 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.

According to Section 29(3) if you have received Zero value FORM GST REG-19 (Cancellation Order) then it does not means that all frauds/ Tax Evasion done prior to date of cancellation have been washed away. If at later stage, GST Department finds any Tax evasion, then they can recover the same even after GST Cancellation.

Now, the question arises that, if my GST is cancelled Suo Motto by Officer then what I have to do, if I want to continue my GSTIN Number.

Section 30 of CGST Act, 2017 gives an opportunity to dealer to apply for Revocation of cancelled GST Registration. According to this section, if GST registration is cancelled by GST officer on his own motion, then dealer has to apply for cancelled GST Revocation within 30 days from the date of service of cancellation order.

Note: To give relief to the GST dealers, whose GST is cancelled by GST officer on his own motion, it has been decided by GST Council to give one time opportunity to all GST dealer who are not able to submit their GST Revocation request within specified time period, so that they can revive their cancelled GST. As on date, that scheme is still under proposed form and hoping to be notified soon to help genuine dealers.       

GST Revocation request is required to be filed in FORM REG – 21. And if GST Officer is satisfied with the application, 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. 

Note: Many queries are received from GST Dealers that, their GST Number has been cancelled by GST Officer on their own request, whether they are eligible to file GST Revocation request.

Please note that, Section 30 of CGST Act, 2017 related to GST Revocation is applicable only in case of Suo Motto GST Cancellation and not in case of GST Cancellation done on the request of the dealer.

This article is for the purpose of information and shall not be treated as a solicitation in any manner and for any other purpose whatsoever. It shall not be used as a legal opinion and not be used for rendering any professional advice. This article is written on the basis of the author’s personal experience and provision applicable as on the date of writing of this article. Adequate attention has been given to avoid any clerical/arithmetical error, however; if it still persists kindly intimate us to avoid such error for the benefits of other readers.

The Author “CA. Shiv Kumar Sharma” can be reached at mail –shivsharma786@gmail.com and Mobile/Whatsapp – 9911303737/ 9716118384


Author Bio

My Self CA. Shiv Kumar Sharma. I am a member of "The Institute of Chartered Accountants of India" since 2012. Currently, I am in Practice and dealing in Direct and Indirect taxation along with ROC Compliances. I am writing Articles for Taxguru.in, casansaar.com and in the expert panel of ca View Full Profile

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July 2024