Liability of GST Return on voluntary cancellation of registration

In today’s scenario there is a lot of confusion that are we liable to file GST returns after applying for cancellation of GST registration on voluntary basis.

Are we liable to pay any penalty for not filing GST Return in between the period of application and cancellation order?

Whether there is a need to file GSTR after applying for voluntary cancellation of registration?

Let’s clarify the confusion here!

Law Background

As per Rule 20, Application for cancellation of registration: A registered person, other than a person to whom a registration has been granted under rule 12 (Person required to TDS/TCS) 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.

Rule 21A, Suspension of registration:

• 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.
• 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.
• A registered person, whose registration has been suspended under sub-rule (1) or sub-rule (2), shall not make any taxable supply during the period of suspension and shall not be required to furnish any return under section 39.
• 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.]26

Rule 22, Cancellation of registration: 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]27 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 sub-section (5) of section 29.

Conclusion:

When a person voluntary submit an application for cancellation of registration, the status of the registration becomes suspended from the day he submit application .i.e. FORM GST REG-16 and the person shall not make any taxable supply during the period of suspension and shall not be required to furnish any return under section 39.

FAQ’s

Q 1. Is it mandatory to file return u/s 39?

Ans: Yes

Q 2. Are we liable for any penalty?

Ans: No

Q 3. Am I need to file any other return?

Ans: Yes, still you need to file Annual return and GSTR-10 (Final return).

Q 4. I have applied for cancellation of registration. Can I still login to GST Portal to file Form GSTR-10 and Annual return?

Ans: Yes. Your log in will remain active for the remaining activities required to be fulfilled after cancellation.

Q 5. What is time limit for GSTR-10 & Annual return?

Ans: Due date to file Annual return is November 2019 (F.Y 2017-18) and GSTR-10 need to be submit within 3 months form the date of cancelation order.

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