Goods and services tax or GST has been introduced as one nation one tax to subsume different taxes that were charged earlier by central and state governments.
To get started, a taxable person has to first register under the GST law. However, there can be cases where registration taken by the taxable person require cancellation.
In this article, we will be discussing circumstances and procedures for cancellation of GST registration in India.
As per GST law, we have two scenarios where cancellation of GST registration can take place;
- Voluntary cancellation – This happens when the taxable person no more requires GST registration, and
- Suo-Motu cancelling of GST registration – In this case, the officer in charge considers the registration liable for cancellation
For easy understanding of our readers we have detailed out the cancellation procedure of GST registration below;
Voluntary cancellation of GST registration
In the case of voluntary cancellation, the taxable person is required to apply on the common portal within 30 days of the event warranting cancellation in form GST REG-16.
While applying, the taxable person is required to disclose certain details like closing stock as on the date with effect from which he seeks cancellation, payment made towards discharging liability and credit reversal.
Voluntary cancellation is not allowed within one year from the effective date of registration. This means the registered person can apply for cancellation of registration after the completion of one year from the effective date of registration.
After applying if the officer in charge satisfied then he has to cancel the registration within 30 days from the application date or the date of reply to notice by issuing an order in Form GST REG-19.
Suo-Motu Cancelling of GST registration
GST registration can be cancelled in certain circumstance by the officer in charge. Like in cases where the registered person is not doing business from the registered place of business or if he issues tax invoice without making the supply of goods or services.
In such type of cases, a proper officer can consider the registration liable for cancellation. However, notice of hearing and opportunity of being heard or show cause notice in form GST REG-17 is a must before cancellation.
The person can reply to the show cause notice in Form GST REG-18 within 7 days from the date of service of show cause notice stating the reason why registration should not be cancelled.
If the reply to the show cause notice found satisfactory then the officer will drop the proceedings and pass an order in FORM GST REG –20 or else he will issue an order in FORM GST REG-19. The order has to be sent within 30 days from the date of reply to show cause notice.
Revocation of cancellation of GST registration
If the registered person wants to revoke the cancellation then he can apply for revocation within 30 days from the date of service of order in form GST REG-21.
However, before applying for revocation, the registered person is required to comply with all the provisions of GST law that he has violated for which certificate has been cancelled.
If the proper officer satisfied then he will revoke the cancellation earlier ordered by him in Form GST REG-22 within 30 days from the date of receipt of the application.
The officer may reject the revocation application. However, before rejecting he must issue show cause notice in form GST REG-23 to the applicant. The applicant is required to reply within 7 working days from the date of service of notice in form GST REG-24.
Revocation of cancellation under CGST will be a deemed revocation under SGST and vice-a-versa.
When can GST registration get cancelled?
As per GST law here are certain cases where registration can get cancelled either voluntarily or by a proper officer;
- Registered business has been transferred or discontinued
- Change in the constitution of business. (For example- Partnership Firm changed to Sole Proprietorship due to death of one of the two partners, leading to change in PAN )
- Persons no longer liable to be registered under Section 22 and 24 (Except when he is voluntarily registered)
- Where registered taxable person has contravened provisions of the Act as may be prescribed
- A composition supplier has not furnished returns for 3 consecutive tax periods/ any other person has not furnished returns for a continuous period of 6 months
- Non-commencement of business within 6 months from the date of registration by a person who has registered voluntarily.
- Where registration has been obtained by means of fraud, willful statement or suppression of facts, the registration may be cancelled with retrospective effect.
- not filing a return for a continuous period of six months (for a normal taxable person) or three returns (for Composition taxable person)
- registration has been obtained by means of fraud
- not commencing business within six months from the date of registration (in the case of voluntary registration)
After cancellation, liability to pay tax before the date of cancellation will not be affected. Once Cancellation is done under CGST Act, it will be deemed as cancellation under State GST Act and vice-versa.
Registration certificate can even be cancelled retrospectively. Cancelling your registration under GST law will not cancel or close your business. You can continue your business after cancellation if your business does not require registration under GST law. It means registration is no longer required for your business or you don’t have to be GST registered.