Meaning of cancellation of GST registration

Cancellation of GST registration simply means that the taxpayer will not be a GST registered person anymore. He will not have to pay or collect GST or claim the input tax credit and accordingly, need not file GST returns.

Consequences of GST registration cancellation

• The taxpayer will not pay GST anymore
• For certain businesses, registration under GST is mandatory. If the GST registration is cancelled and business is still continued, it will mean an offence under GST and heavy penalties will apply.

Who can cancel the GST registration?

The below infographic guides you on who can call for the cancellation of GST registration-

Application for cancellation, in case of voluntary registrations made under GST, earlier could have been made only after one year from the date of registration. This provision stands rescinded. 

Cancellation of GSTIN for Migrated Taxpayers

Every person who was registered under erstwhile indirect tax laws had to mandatorily migrate to GST. Many such persons may have not been liable to be registered under GST. For example, the threshold under VAT in most states was Rs.5 lakhs and Service Tax was Rs.10 lakh, whereas it is Rs.20 lakh* under GST. However, they had to make sure you are not making inter-state supplies since registration is mandatory for inter-state suppliers except for service providers.

*Rs.40 lakh in case of a supply of only goods in some states or Rs.10 lakh in certain special category states/Union Territories. Such a taxpayer had to submit an application electronically in the form GST REG-29 at the GST portal. 

The proper officer shall, after conducting an enquiry as required would cancel the registration. 

Below are the steps for cancelling GSTIN by the migrated taxpayers on the GST Portal- 
Step 1- Log in to the GST Portal and click the Cancellation of Provisional Registration

Step 2-

• The Cancellation page opens.
• Your GSTIN and name of business will show automatically.
• You are required to give a reason for cancellation.

You will be asked if you have issued any tax invoices during the month.

Simply fill up the details of authorized signatories and their place. Finally, sign off with EVC if you are a proprietor or a partnership firm. LLPs & Companies must mandatorily sign with DSC. 
Note: Taxpayers who have not issued tax invoices can avail above service. If the taxpayer has issued any tax invoice then FORM GST REG-16 needs to be filed. Refer below.

Cancellation by taxpayer (Other than Migrated)

Why does a taxpayer wish to cancel his registration?

• The business has been discontinued
• The business has been transferred fully, amalgamated, demerged or otherwise disposed of —The transferee (or the new company from amalgamation/ demerger) has to get registered. The transferor will cancel its registration if it ceases to exist.
• There is a change in the constitution of the business   
• From 1st January 2022, CBIC made the aadhaar authentication mandatory to apply for revocation of cancelled GST registration under the CGST Rule 23 in REG-21.

(For example- A private limited company has changed to a public limited company)

Forms for cancellation

All those who cannot follow the above method must file an application for cancellation in form GST REG 16. The legal heirs of the deceased taxpayer will follow the same procedure as below.

• Application for cancellation has to be made in form GST REG 16.
• The following details must be included in form GST REG 16-
  • Details of inputs, semi-finished, finished goods held in stock on the date on which cancellation of registration is applied
  • Liability thereon
  • Details of the payment
• The proper officer has to issue an order for cancellation in the form GST REG-19 within 30 days from the date of application. The cancellation will be effective from a date determined by the officer and he will notify the taxable person

Cancellation by tax officer

Why will the officer cancel registration?

The registration can be cancelled if the taxpayer-

(a) Does not conduct any business from the declared place of business OR 

(b) Issues invoice or bill without supply of goods/services (i.e., in violation of the provisions) OR 

(c) Violates the anti-profiteering provisions (for example, not passing on the benefit of ITC to customers) OR

With effect from 1st January 2021-

(d) Utilisation of ITC from electronic credit ledger to discharge more than 99% of the tax liability for specified taxpayers violating Rule 86B – with the total taxable value of supplies exceeding Rs.50 lakh in the month, with some exceptions. OR

(e) A taxpayer who cannot file GSTR-1 due to GSTR-3B not being filed for more than two consecutive months (one quarter for those who opt into the QRMP scheme) OR 

(f) Avails input tax credit in violation of the provisions of section 16 of the Act or the rules.

Procedure

• If the proper officer has reasons to cancel the registration of a person then he will send a show-cause notice to such person in form GST REG-17.
• The person must reply in form REG–18 within 7 days from the date of service of notice why his registration should not be cancelled.
• If the reply is found to be satisfactory, the proper officer will drop the proceedings and pass an order in the form GST REG–20.
• If the registration is liable to be cancelled, the proper officer will issue an order in the form GST REG-19. The order will be sent within 30 days from the date of reply to the show cause.

Revocation of cancellation of registration

What is revocation of cancellation?

Revocation means the official cancellation of a decision or promise. Revocation of cancellation of registration means that the decision to cancel the registration has been reversed and the registration is still valid.

FAQs and Revocation of GST Registration Cancellation

FAQs > Suo Moto Cancellation

1. Under which circumstances can a Tax Official initiate for cancellation of GST registration?

Suo Moto Cancellation of registration may be initiated by the Tax Official for various situations as mentioned in the provisions of GST law like: –

• Any Taxpayer other than composition taxpayer has not filed returns for a continuous period of six months
• Supplies any goods and / or services without issue of any invoice, in violation of the provisions of the Act or rules made thereunder, with the intention to evade tax
• Issues any invoice or bill without supply of goods and/or services in violation of the provisions of this Act, or the rules made thereunder leading to wrongful availment or utilization of input tax credit or refund of tax
• Collects any amount as representing the tax but fails to pay the same to the account of the Central/State Government beyond a 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 account of the Central/State Government beyond a period of three months from the date on which such payment becomes due
• Person is no longer liable to deduct tax at source as per the provisions of GST Law
• Person is no longer liable to collect tax at source as per the provisions of GST Law
• Person no longer required to be registered under provisions of GST Law
• GST Practitioner is found guilty of misconduct in connection with any proceeding under the GST Law.
• Discontinuation/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
• Composition person has not furnished returns for three consecutive tax periods,
• Registration has been obtained by means of fraud, willful misstatement or suppression of facts. Etc.

2. Will I be intimated before the Suo Moto Cancellation of Registration?

Yes. Registration cannot be cancelled without a Show Cause Notice being given to taxpayer and a reasonable opportunity of being heard by the Tax Official. Thus, in case of Suo Moto cancellation of registration, a Show Cause Notice shall be issued by the Tax Official/ Proper officer to the taxpayer and taxpayer would be given a chance to file clarifications in the stipulated time limit.

3. What is the precondition for Suo Moto Cancellation of Registration?

There must be a valid reason for initiation of proceeding for Suo moto cancellation as specified under Section 29(2) of the CGST/SGST Act.

4. What is the duration within which I need to file a response for Show Cause Notice regarding Suo Moto Cancellation of Registration?

You need to provide response within the prescribed time limit of 7 working days’ time to file reply to the Show Cause Notice (SCN) using the Services > Registration > Application for Filing Clarifications link. If no response is given within prescribed 7 working days, the Tax Official can proceed with Cancellation of registration.

5. What will happen once Show Cause Notice is Dropped?

In case the Tax Official is satisfied with the response received from the taxpayer, on the Show Cause Notice issued, the proceedings can be dropped.

1. Primary Authorized Signatory will be intimated about dropping of SCN by SMS & Email.
2. Issuance of Order for dropping of SCN will also be intimated to the Primary Authorized Signatory by Email and SMS.
3. Order will be made available on the taxpayer’s dashboard to view, print and download.
4. Status of GSTIN will change from “Suspended” to “Active”.

6. What shall be the effective date of cancellation of registration?

Effective date of cancellation will be the date as mentioned in the cancellation order.

7. Will the cancellation of registration means that I have no liabilities?

No, any liabilities prior to the date of suo moto cancellation will have to be paid by the taxpayer, irrespective of the fact that when determination of liabilities are done.

Any liability which is related to that particular GSTIN is required to be paid by the taxpayer. It can be recovered later on even after the cancellation of GSTIN.

8. Will the Suo moto Cancellation of registration be proceeded separately for each act?

Cancellation of registration under the CGST Act or SGST/UTGST or IGST Act shall be deemed to be a cancellation of registration under SGST Act / UTGST Act or CGST Act respectively and vice versa.

9. What will happen once Registration is cancelled?

a)    Once registration is cancelled by the Tax Authority, the taxpayer will be intimated about the same via SMS and Email.  Order for Cancellation of Registration will be issued and intimated to the Primary Authorized Signatory by Email and SMS.

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

c)     Status of the GSTIN/UIN/GSTP ID from ‘Proceeding for Cancellation initiated’ to ‘Inactive’ and will be intimated to the other concerned Tax Authority.

d)    Taxpayer would not be allowed to file return or upload invoices for the period after date of cancellation mentioned in the cancellation order. Also, GSTP will not be able to carry out GSTP functions for any Taxpayer for the period after the date of cancellation mentioned in the cancellation order.

e)    Taxpayer will not be able to amend registration details after issuance of cancellation order. However, email address and mobile number can be updated till dues/ refund are cleared. The facility to file application for revocation (if applicable) will be open for the Cancelled Registration.

10. Will I be able to login after suo moto cancellation of registration?

Yes, you can login to the GST Portal after suo moto cancellation of registration.

11. Can I update my email and mobile after suo moto cancellation of registration?

You will not be able to amend registration after issuance of cancellation order.

However, email address and mobile number can be updated till dues/ refund are cleared. 

12. Can I submit returns of the earlier period after suo moto cancellation of registration?

You can submit returns of the earlier period (i.e. for the period before date of cancellation mentioned in the cancellation order), after suo moto cancellation of registration. However, you will not be allowed to file return or upload invoices for the period after 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.

13. Where can I view the Show Cause Notice regarding Suo Moto Cancellation of Registration?

Navigate to Services > User Services > View Notices and Orders to view the Show Cause Notice regarding Suo Moto Cancellation of Registration.

To know more, you can refer the manual https://tutorial.gst.gov.in/userguide/taxpayersdashboard/index.htm#t=View_Notices_and_Demand_Orders.htm

14. How can I reply to the Show Cause Notice regarding Suo Moto Cancellation of Registration?

To reply to the Show Cause Notice related to Suo Moto Cancellation, Navigate to Services > Registration> Application for Filing Clarifications.

The application is displayed for filing clarification. The reason for cancellation provided by Tax Officer will be displayed in the form. You can enter your Response.

Note: Taxpayer is required to submit his/her response to each of the cancellation reasons invoked by the tax officer in the notice.

15. Where can I view the date for personal hearing regarding Suo Moto Cancellation of Registration?

Navigate to Services > User Services > View Notices and Orders to view the Show Cause Notice regarding Suo Moto Cancellation of Registration. Download the notice to view the personal hearing date.

To know more, you can refer the manual https://tutorial.gst.gov.in/userguide/taxpayersdashboard/index.htm#t=View_Notices_and_Demand_Orders.htm

16. Where can I view the order regarding Suo Moto Cancellation of Registration?

Navigate to Services > User Services > View Notices and Orders to view the order regarding Suo Moto Cancellation of Registration.

To know more, you can refer the manual https://tutorial.gst.gov.in/userguide/taxpayersdashboard/index.htm#t=View_Notices_and_Demand_Orders.htm

17. Can I submit application for cancellation of registration, in case Tax Official has already initiated the suo-moto cancellation of Registration?

No, you cannot submit application for cancellation of registration, in case Tax Official has already initiated suo-moto cancellation of your Registration.

18. The status my GSTIN is showing as “Suspended” under My Profile. Why?

When a taxpayer files an application for cancellation of registration or Suo Moto cancellation has been initiated by the Tax Official, the status of the GSTIN is shown as “Suspended”. This will be changed to “Active” only when application for cancellation of registration is rejected by the Tax Official or Suo Moto cancellation proceeding is dropped, after hearing.

19. The status my GSTIN is showing as “Suspended” under My Profile. Can I perform any activity on the GST Portal?

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.

20. What is the effective date of suspension?

• When a taxpayer files an application for cancellation of registration: Date of Suspension will be the date on which Cancellation application was filed.
• Suo Moto cancellation has been initiated by the Tax Official: Date of Suspension will be the date on which notice for Cancellation of registration (Form GST REG-17) is issued.

21. What will happen once the status is changed from “Suspended” to “Active”?

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

23. What happens if I have filed all my due returns after SCN has been issued by the system for non-filing of Returns/Statements and my status becomes suspended?

Once all the due returns are filed, further proceedings will be auto dropped for cancellation of the GSTIN where SCN has been issued for non-filing of Returns/Statements by the system and the registration status would become active even if you have not responded to the SCN issued.

24. I have filed all my due returns. However, my registration status is still showing as Suspended. How can I update my status?

Once all the due returns are filed, proceedings will be auto dropped for cancellation of the GSTIN in cases where SCN has been issued for non-filing of Returns/Statements by the system and your status will change from ‘Suspended’ to ‘Active’.
In case proceedings are not dropped automatically, 

a) You can click on INITIATE DROP PROCEEDING button to update your status.

b. Success message will be displayed, and proceedings will be auto dropped.

25. What happens if I do not furnish details of my bank account within 30 days of grant of registration or before the due date of filing GSTR-1/IFF, whichever is earlier.

If I do not furnish details of my bank account within 30 days of grant of registration or before the due date of filing GSTR-1/IFF, It would result into following:

a) Taxpayer Registration would get suspended after 30 days and intimation in FORM REG-31 will be issued to the Taxpayer.

b) Get the Taxpayer debarred from filing any further GSTR-1/IFF.

26. How can my suspension due to failure to furnish my bank account details post registration be revoked?

If you have updated your bank account details through non-core amendment, the suspension will be automatically revoked. Click here to see further details.

27. What happens if I do not furnish my bank account details even after suspension of registration?

If the bank account details are not updated even after 30 days of issuance of FORM REG-31, the registration after suspension may also be taken up for cancellation process by the officer.