As per the Goods and Services Tax (GST) law, cancellation of GST registration can be initiated by both the proper officer or by the taxpayer himself. In case the proper officer has a reason to believe that the GST registration of the taxpayer should be cancelled. Then, the proper officer will begin the cancellation proceedings by issuing a show cause notice in Form GST REG-17.

The current article covers the circumstances under which notice can be issued by the proper officer; provisions relating to the issuance of notice in Form GST REG-17 and action post receipt of notice by the taxpayer.

Circumstances under which GST registration can be cancelled by the proper officer-

Provisions of section 29(2) of the Central Goods and Services Tax Act, 2017 covers the situations under which the proper officer can cancel the GST registration. The same is narrated hereunder-

  • Non-furnishing of GST return under the following cases-
    • In the case of composition scheme dealer, the taxpayer has not furnished three consecutive GST returns; and
    • In any other case, the taxpayer has not furnished six consecutive GST returns.
  • The GST registration has been obtained by the means of either willful misstatement or fraud or by suppression of facts.
  • The taxpayer has obtained voluntary GST registration. However, the taxpayer has not started the business within a period of six months from the date of registration.
  • The registered taxable person has contravened provisions of the GST Act or the GST rules made thereunder.

Under any of the above situation, the proper officer can initiate the cancellation proceedings by issuing notice in Form GST REG-17.

Cancellation of GST Registration

Understanding the provisions surrounding the issuance of notice in Form GST REG-17-

As seen above, under any of the above circumstance, the proper officer can cancel the GST registration of the taxable person. However, before cancelling the GST registration, as per proviso to section 29(2) it is mandatory for the proper officer to give an appropriate opportunity of being heard.

Additionally, as per rule 22(1) of the Central Goods and Services Tax Rules, 2017, the proper officer, prior to the cancellation of GST registration, shall issue a notice in Form GST REG-17. The notice in Form GST REG-17 will cover the following-

  • Reasons based on which the proper officer believes that the GST registration should be cancelled.
  • Direction to the taxable person to furnish an appropriate reply within a period of seven working days from the date of service of notice in Form GST REG-17.
  • Date and time of the personal hearing, if any, to be held in the matter.

Action on the part of the registrant post receipt of notice in Form GST REG-17-

The GST registrant person who has been served notice in Form GST REG-17 can take any of the following action-

1. If satisfied, can accept the cancellation and accordingly pay off all the pending dues; or

2. If aggrieved, the registrant should file an appropriate reply in Form GST REG-18 within the prescribed time limit.

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