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Cancellation of registration under GST

Registration under Goods & Service tax can be canceled by the tax officer either on his own motion or on an application filed by the taxpayer or his legal heirs. Once GST canceled, the taxpayer will no longer liable to pay or collect tax in the GST regime. This article explains the reasons, procedure & consequences of cancellation of GST registration.

Recent updates related to GST registration

28th May 2021

The last date for filing an application for revocation of canceled GSTIN falling between 15th April 2021 to 29th June 2021 extended to 30th June 2021.

5th March 2021

The search ARN functionality for registration on the common portal has been enhanced for taxpayers.

31st January 2021

(i) SEZs while applying for GST registration will have to provide the validity period as per the letter of authorisation (LOA).

(ii) Aadhaar authentication has been implemented on the Common portal for existing taxpayers.

31st December 2020

(i) For new registrants who opted for Aadhaar authentication, the authentication would be required only for one Primary Authorized Signatory and one Promoter instead of all.

(ii) Now, GST practitioners can apply cancellation of GST registration in Form GST PMT-06.

Reasons for cancellation of GST registration

Taxpayers may receive GST cancellation notice in GST REG-17 due to the following reasons-

  • Taxpayer has contravened any of the provisions of GST law.
  • Composition dealer has not filed three consecutive returns
  • A regular taxpayer (other than composition dealer) has not filed a return for six consecutive months
  • The business has not been commenced within 6 months in case of a voluntary registration
  • GST registration has been obtained by means of fraud, willful misstatement, or by suppression of facts.

Further, as per rule 21 of CGST Rules, 2017, tax official has the power to cancel the registration in the following cases also-

  • An invoice or bill has been issued without the supply of goods or services.
  • Provisions of Rule 86B have been violated. As per Rule 86B, specified taxpayers cannot utilize input tax credit (ITC) more than 99% to pay GST dues.
  • The benefit of tax rate reduction or input tax credit has not been passed to the recipient of goods/services (violation of anti-profiteering measures)
  • No business conducted from the declared place of business.
  • ITC availed in violation of statutory provisions

When GST registration can be surrendered by the taxpayer?

The taxpayer or legal heir may file an application for surrender of GST registration in the following circumstances –

  • The business has been transferred on account of amalgamation, merger, demerger, and sale or otherwise. Please note that the transferee must be registered in GST.
  • The business has been discontinued for any reason.
  • The Constitution of business has been changed (for example – a firm converted into s private limited company).
  • The taxpayer is no longer liable to register for GST.

Cancellation by tax officer - Procedure

If the tax officer has reasons to believe that the registration of a person is liable to be cancelled, he will follow the below procedure:

Step 1: Show cause notice (SCN) to the taxpayer

Before passing a cancellation order, the officer shall give an opportunity of being heard to the taxpayer. This means the officer shall send a show-cause notice to the taxpayer in Form GST REG-17 asking him why his registration should not be canceled.

Step 2: Reply to show cause notice

At this step, the taxpayer shall reply to SCN in Form GST REG-18 within 7 days from the date of service of notice.

Step 3: Final order

The tax officer may cancel GST registration by issue an order in Form GST REG-19 within 30 days from the date of receipt of the reply of SCN.

If the officer is satisfied with the reply of a taxpayer, he will stop the cancellation and pass the order in GST REG-20.

Cancellation requested by taxpayer - Procedure

Step 1: Login into the GST portal

Visit the GST website and enter login credentials.

Step 2: Access application for cancellation.

Cancellation application can be accessed using the navigation given below- "Services" > "Registration" > "Application for Cancellation of registration".

Step 3: Fill in the details

Cancellation application is divided into the following three tabs-

1. Basic Details – This tab will show Pre-filled information. Fill in the address details or select the address option same as above.

2. Cancellation Details – Select the reason and date of cancellation.

3. Verification- Verify the application using EVC or digital signature. After verification of the application, ARN will be generated.

GST cancellation forms

Forms involved in the GST registration cancellation process has given in the below table-

 

Form

Description

GST REG-16

Application for cancellation

GST REG-17

SCN to taxpayer

GST REG-18

Reply to SCN

GST REG-19

Cancellation order

GST REG-20

Order to stop the cancellation

GST REG-21

Application for revocation for cancellation

GST REG-22

Order for revocation of cancellation

 

Consequences of cancellation of GST registration

Canceled GST will have the following implications-

  • Tax cannot be collected from customers. Moreover, collected tax shall be deposited with the government by way of debit in an electronic credit ledger or electronic cash ledger.
  • ITC will not be available from the date of cancellation. Not only that but surplus ITC would also be reversed.
  • No liability to pay GST in the future. However, prior dues will not be affected because of cancellation.
  • Furnishing of GST returns is not required.
  • Operating business after cancellation may attract heavy penalties if registration is mandatory for the taxpayer.

Final return

On cancelation of registration, the taxpayer has to file the final return online in FORM GSTR-10 through the GST portal. The time limit to submit the final return is 3 months from the date of cancelation or date of cancellation order, whichever is later.

For example,

Date of cancellation order of GST – 20 January 2021

Date of cancellation of GST – 25 January 2021

Final return must be filed within 3 months from 25 January (on or before 25 April 2021) in our example.

And, if a final return is not filed, notice will be issued to the taxpayer extending the period of 15 days for filing the return. In case of non-compliance of notice, the concerned officer will assess the tax dues of the taxpayer on the basis of information available with him. 

Frequently asked questions (FAQs)

The following can file an application for cancellation of GST registration:

  • Proper officer on his own motion
  • Registered person
  • Legal heirs in case of death of a taxpayer

  • A person registered as Tax Deductor / Tax Collector
  • Person to whom UIN has been allotted

While filing the application for cancellation of registration, the taxpayer needs to fill the value of stock and corresponding tax liability on the stock, and accordingly offset the liability (tax payable) from Electronic Cash Ledger / Electronic Credit ledger equivalent to the credit of input tax in respect of inputs held in stock and inputs contained in semi-finished goods 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, calculated in such manner as may be prescribed.

In case of capital goods or plant and machinery, the person shall pay an amount equal to the input tax credit taken on the said capital goods or plant and machinery, reduced by such percentage points as may be prescribed or the tax on the transaction value of such capital goods or plant and machinery, whichever is higher.

When the status of your GSTIN is showing as “Suspended” status, you can perform certain activities on GST Portal like filing Appeal, making payment, filing for Refunds, reply to Assessment/Recovery/ Enforcement related orders/ notices, even make non-core amendment etc. However, once GSTIN is suspended:

  • During the suspension status, taxpayer will be allowed to file return or upload invoices only for the period before the registration was suspended.
  • Taxpayer will not be able to file core amendment application till the time registration is suspended. However, email address and mobile number can be updated till dues/ refund are cleared.


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CA Anand Singh

CA Anand Singh

I am a practising Chartered Accountant with 6 years of experience in Direct and Indirect Taxation, FEMA, Corporate Law and Audit etc.