GST Registration can be cancelled either suo-moto or on application filed by the registered person. But why would a person want to cancel the registration?
Circumstances that would warrant the registered person to cancel his registration are:
a) The business has been discontinued/transferred fully for any reason/amalgamated with other legal entity/demerged, or otherwise disposed of/death of the proprietor.
b) There is any change in the constitution of the business
c) The taxable person (other than the person registered under Voluntary Registration) is no longer liable to be registered.
Where a registered person falls under the above mentioned circumstances, it becomes it’s duty to apply for the cancellation of his registration as the outstanding liability cannot be left undischarged. The pending liability has to be paid either by debiting it’s electronic credit/cash ledger or payment of the output tax payable on the stock of semi-finished/finished goods or capital goods.
Rule 20 of the CGST Rules provides that where the taxpayer wants to apply for cancellation of registration such person shall be required to do the following:
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I. Application in Form REG-16 for GST Registration cancellation
This application shall be filed within 30 days of the occurrence of the event warranting the cancellation. This limit of 30 days has to be interpreted liberally. That is to say, suppose a business is transferred or disposed of over a period of time in a piece meal fashion, then it’s application would not be rejected because of the possible violation of the deadline.
Mandatory information required in Form REG-16:
a. Address for future correspondence with mobile number and email-id
b. Reason for cancellation : A list of reasons appears on the portal as stated below:
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- Change in constitution of business leading to change in PAN
- Ceased to be liable to pay tax
- Discontinuance/Closure of business
- Transfer of business on account of merger/demerger/amalgamation/sale
- Death of sole proprietor
- Others(Reason needs to be specified if this option is selected)
c. Date from which cancellation is sought
d. Details of vale of ITC payable on the stock of inputs, inputs contained in semi- finished/finished goods , stock of capital goods
e. Copy of transfer deed- only in case the business has been merged with existing business along with particulars of registration of the existing entity.
f. Details of the last return filed by the taxpayer along with the ARN of such return filed
On successful submission of the cancellation application, the same appears on the dashboard of the jurisdictional officer.
II. Order of GST Registration cancellation
The proper officer shall accept such application within 30 days from the date of filing in Form REG-19 , with it’s effective date being the date from which the applicant has sought the cancellation.
Exception to acceptance of application:
- Where the application in Form REG -16 is incomplete
- Where the entity has been amalgamated/merged with another business which is not registered with the tax authorities
The proper officer shall inform the applicant in writing about the discrepancies stated above and grant a time period of 7 working days, from the date of receipt of the letter, to reply. However if no reply is submitted within the stipulated time period , then after giving the opportunity of being heard, the cancellation application shall be rejected, subsequent to recording the reasons for doing so.
III. Liability to be discharged
Section 29(5) of the CGST Act read with Rule 20 of the CGST Rules states that the taxpayer seeking cancellation of registration, shall have to pay the liability by debiting the electronic cash/credit ledger or payment of the output tax payable on the stock of semi-finished/finished goods or capital goods.
IV. Filing of Final Return- GSTR-10
GSTR 10 must be filed within 3 months from the date of cancellation or date of cancellation order whichever is later. The outstanding liability can be discharged before filing of GSTR10 or at the time of filing GSTR10.
In case GSTR10 is not filed within the stipulated time, then a Notice in Form GSTR-3A. And in case the taxpayer still fails to file the final return within 15 days of the date of receipt of notice then an assessment order in FORM ASMT-13 would be issued to the taxpayer to determine his liability.
However if the taxpayer files the return within 30 days of the date of service of order, then the said order shall be deemed to have been withdrawn.
This completes the process of Cancellation of the GST Registration. Hope you found it useful.
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The author can be reached at jainrashi2008@gmail.com for any further assistance.
DISCLAIMER: The views expressed are strictly of the author. The contents of this article are solely for informational purpose. It does not constitute professional advice or recommendation of firm. Neither the author nor firm and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any information in this article nor for any actions taken in reliance thereon.
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What is the procedure in case the proper officer does not pass an order accepting or rejecting the GST Registration even after 6 months? What action can the assessee take in this matter