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Suo Moto Cancellation of GST registration

What is Suo Moto Cancellation under GST?

Suo Moto Cancellation means cancellation of registration under Goods and Services Tax (GST) by the tax officer on its own motion. The tax officer must have a valid reason as specified under Section 29(2) of the CGST Act for initiation of cancellation proceedings.

What can be the reasons for Suo Moto Cancellation?

Suo Moto Cancellation of registration may be initiated by the officer for various reasons as mentioned in the provisions of GST law like: -

  • Supplies any goods and/or services without the issue of any invoice with the intention to evade tax
  • Any Taxpayer other than composition taxpayer has not filed returns for a continuous period of six months
  • Composition dealer has not furnished returns for three consecutive tax periods
  • Issues any invoice or bill without supply of goods and/or services in violation of the GST law leading to wrongful availment or utilization of input tax credit or refund of tax
  • Collects any amount of tax but fails to pay the same to the Central/State Government within the period of three months from the date on which such payment becomes due
  • Fails to pay any amount of tax, interest, or penalty to the Central/State Government within the period of three months from the date on which such payment becomes due
  • Person is no longer liable to deduct tax at source under GST
  • Person is no longer liable to collect tax at source under GST
  • Person no longer required to be registered under GST
  • GST Practitioner is found guilty of misconduct in connection with any proceeding under the GST Law
  • Discontinuation or closure of Business
  • Change in Constitution leading to change in PAN
  • Ceased to be liable to pay tax
  • Transfer of business on account of amalgamation, merger/demerger, sale, lease or otherwise disposed of, etc.
  • Death of Sole Proprietor
  • Registration has been obtained by means of fraud, willful misstatement, or suppression of facts. Etc.

How will Suo Moto Cancellation under GST be communicated to the taxpayer?

(a) The taxpayer will be intimated about the same via SMS and Email. Order for cancellation of GST registration will be issued and intimated to the primary authorized signatory by email and SMS.

b) Order will be made available on the taxpayer’s dashboard to view, print and download. 

Opportunity of being heard

Registration cannot be cancelled without a Show Cause Notice (SCN) being given to the taxpayer and a reasonable opportunity of being heard by the officer. Therefore, before initiating Suo Moto cancellation proceedings, an SCN shall be served by the Tax Official to the taxpayer asking why his registration should not be cancelled.

What will be the consequences of Suo Moto Cancellation?

  • Status of the GSTIN/UIN/GSTP ID from ‘Proceeding for Cancellation initiated’ to ‘Inactive’ and will be intimated to the other concerned Tax Authority.
  • Taxpayer would not be allowed to file the return or upload invoices for the period after the date of cancellation mentioned in the cancellation order.
  • Taxpayer will not be able to modify registration details after issuance of cancellation order. However, email address and mobile number can be updated till dues/ refund are cleared.

Note, the facility to file an application for revocation will be open for the cancelled registration.

What are the options available to the taxpayer after receiving a cancellation notice?

Taxpayer needs to reply within the prescribed time limit of 7 working days from the date of receipt of Show Cause Notice (SCN).

If the officer is satisfied with the taxpayer's reply,

  • Proceedings can be dropped.
  • Primary authorized signatory will be intimated about dropping of SCN by SMS and e-mail.
  • Order will be made available on the taxpayer’s dashboard to view, print and download.
  • The status of GSTIN will change from “Suspended” to “Active”.

If no reply is given within the prescribed 7 working days, the officer can proceed with the Cancellation of registration.

What activities can be performed on the GST portal once GSTIN is suspended?

The status of the GSTIN will appear as “Suspended” when a taxpayer files an application for cancellation of registration or Suo Moto cancellation has been initiated by the Tax Officer.

Once GST is suspended, a taxpayer can perform the following activities on the GST website-

  • Filing of appeal
  • Making payment
  • Filing for refunds
  • Filing of return or upload invoices only for the period before the registration was suspended.
  • Reply to assessment/recovery/ enforcement related orders/ notices, non-core amendment etc.

What is the effective date of GST suspension?

  • If a taxpayer files an application for cancellation of registration - The date of suspension will be the date on which the cancellation application was filed.
  • If Suo Moto cancellation has been initiated by the GST officer - The date of suspension will be the date on which SCN for cancellation of registration is issued.

Can returns of the earlier period be filed after Suo Moto Cancellation of GST registration?

Returns of the earlier period (i.e. for the period before the date of cancellation mentioned in the cancellation order) can be filed after suo moto cancellation.

However, the taxpayer not be allowed to file the return or upload invoices for the period after the date of cancellation mentioned in the cancellation order. Also, GSTP will not be able to carry out GSTP functions on your behalf for the period after the date of cancellation mentioned in the cancellation order.

How the status of GSTIN can be changed from "Suspended to Active"?

Status of "Suspended" GSTIN will be changed to “Active” only when the application for cancellation of registration is rejected by the officer or suo moto cancellation proceeding is dropped after hearing.

Once the status of GSTIN is changed from “Suspended” to “Active”, a taxpayer will be again treated as an active taxpayer and all the accesses given to the active taxpayers on GST Portal will be enabled for him immediately.

Recent updates

 

24th September 2021

An applicant shall undergo Aadhaar authentication for filing an application for revocation of cancellation of registration in FORM GST REG-21 under Rule 23. (Notification No. 35/2021–Central Tax)

Under Aadhar authentication, an authentication link is sent on the registered mobile number and email id. On clicking the verification link, a window for Aadhaar Authentication will open where an applicant needs to enter Aadhaar number and the OTP received on the mobile number linked with Aadhaar. 

Related


How to file a reply suo moto cancellation notice in GST?


How to surrender GST registration (with screenshots)


Cancellation of registration under GST


Revocation of cancelled GST registration


 


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TaxGyata Team

TaxGyata Team