cancellation of gst registration- procedure

GST Registration Cancellation-Requirements & Procedure

BRIEF INTRODUCTION

Cancellation of GST registration is quite a simple task, and the same can be done on the GST Portal, by just following a step-by-step process. Under the GST act, it is provided that the registration of any taxpayer, can be canceled by the taxpayer itself or by the authority.

The following 3 identities are allowed to cancel the registration of a taxpayer, by logging into the GST portal. These are –

1. The person in whose name the registration was granted.
2. Any officer authorized by the GST authority.
3. The legal heir of the person, in whose name registration was granted.

CANCELLATION BY TAXABLE PERSON

As per section 29 of the CGST Act, the taxable person can apply for cancellation GST registration, where any of the following events happens –

1. The business for which the registration was taken, gets closed or is discontinued.
2. The person to whom registration was granted, is not liable to pay any tax under GST.
3. Business is transferred due to merger, amalgamation, de-merger, sale, or leasing of the business.
4. There has been a change in the constitution of business, due to which a new PAN card is required to be issued.
5. The person taking voluntary registration is unable to commence their business within the prescribed time.
6. Person to whom the registration was granted, is not required to take registration under GST.
7. Death of the taxpayer, in case of a sole proprietorship.

CANCELLATION BY GST AUTHORITY

3. Where the registered taxable person is not conducting any business from the place, as declared as place of business in the registration application
4. The taxable person is issuing invoices or bills without undertaking any supply of goods or services, which is termed as a violation of the GST Act and GST rules.
5. The taxpayer violates any of the provisions of the anti-profiteering like, they are not passing the credit of ITC to their customers.

With effect from 1st January 2021, three new events have been included –

• The taxpayer is utilizing the ITC lying in their electronic credit ledger to set off more than 99% of their GST outward tax liability. This is applicable in the case of specified taxpayers, having a total taxable value of supplies exceeding Rs.50 lakh in the month.
• The taxable person is not able to file their GSTR-1, because the same has been blocked due to non-filing of GSTR-3Bfor more than two consecutive months. The said period of one quarter for taxpayers opting for QRMP scheme.
• Taxpayer is availing any amount of input tax credit, that is in violation of the provisions of section 16 of the GST Act.

However, in case of cancellation by the GST authority, the officer is required to issue a notice to the required taxpayer, asking for a show cause within seven working days from the date of receipt of the notice, thereby providing the reason for violating the provisions of GST act.

INELIGIBLE TAXPAYERS

The following taxpayers are ineligible to apply for cancellation of registration under GST –

• Any person who would be registering as a Tax deductor or Tax collector.
• Any taxpayers to whom, the UIN has been allotted.
• Any person applying for registration voluntarily and 1 year has not elapsed since the date of grant of registration.

It is to be noted that the GST authorities cancelled over 1.63 lakh registrations, in the month of October and November, and it involves registration cancellation of those taxpayers, who did not file their GSTR-3B returns for a period exceeding six months.

APPLICATION FOR CANCELLATION

The taxpayer, requiring the cancellation of their GST registration, shall file an application in the Form GST REG-16 available on the GST portal, and the same be filed within 30 days from the happening of the cause of such cancellation. In case, the exact date of event is uncertain or difficult to be estimated, the said deadline be interpreted in a general and liberal manner.

FORMS FOR CANCELLATION OF REGISTRATION

1. GST REG 16

The taxpayer shall file the application in this form, provided he himself is applying for the cancellation of registration and also, there should not be any consideration for the application other than the taxpayers’ application.

2. GST REG 17

Under this form, the authorized GST officer serves the notice for show cause/cancellation of the registration of a registered taxpayer. The officer can initiate the cancellation of registration, after issuing the GST REG 17 and considering the reason for violation, if made in time.

 

3. GST REG 18

Where any notice for cancellation of GST registration is served to a taxpayer, such a person can reply to the notice, by filing the Form GST REG 18, within the prescribed time period, which is of 7 days from the issuance of notice.

4. GST REG 19

Under the Form GST REG 19, the GST officer issues a formal order for the cancellation of GST registration. Such an order be served within 30 days from the date of filing of application or receipt of response in GST REG 18 form.

5. GST REG 20

Under this form, the GST officer makes an order for revoking of the proceeding for cancellation of GST registration, where the show cause notice was served and the officer is satisfied with the reason provided.

INFORMATION REQUIRED FOR CANCELLATION OF REGISTRATION

The applicant shall provide the following information, while filing application for cancellation of registration in Form GST REG-16 –

1. Details of the applicant, including their mobile number and e-mail address.
2. The reason for which the application for cancellation is made.
3. The effective date from which the applicant wants the registration to be cancelled.
4. Complete particulars of the value and tax liability in respect of stock of inputs, the inputs in semi-finished goods, inputs in finished goods, the stock of capital goods/plant and machinery.
5. In case of merger, amalgamation or transfer of the business, the details related to the newly registered entity.
6. Cop of the latest return filed by the taxpayer along with the ARN as provided in the return.

PAYMENT AT THE TIME OF CANCELLATION

Where any taxpayer applies for cancellation of registration,

• they are required to make the payment of the amount, of the input tax remaining in the electronic credit ledge, in respect of stock of inputs, semi-finished goods, finished goods, and capital goods or the output tax liability in respect of such goods, whichever is higher.
• This payment be made using the amount held in the electronic credit or cash ledger, and the final return be filed in Form GSTR-10.

NON-ACCEPTANCE OF APPLICATION

The GST authority may not accept the application for cancellation of registration, due to the following reasons –

• Where the applicant has filed/submitted an incomplete application.

• Where the cancellation was made in the event of a transfer, merger, or amalgamation of business, and the newly established entity was not registered with the tax authority, at the time of filing the application.

FINAL RETURN IN THE FORM GSTR-10

The taxable person, who makes the final payment of GST and whose registration has been canceled, is required to file a final return in the Form GSTR-10 and the same be filed,

• within 3 months from the date of cancellation or
• the date of passing of order for cancellation,

whichever is later.

Such a return is required, so that the taxpayer is relived from all the liabilities which he was required to comply with under Section 29 of the CGST Act.

It is be noted that the taxpayers registered as Input Service Providers and non-resident taxpayers, who pay their taxes under section 10, section 51 or section 52, are not required to comply with the above requirement.

FAILURE TO FILE FINAL RETURN

• In case, the taxpayer, liable to file final return, fails to file the same in Form GSTR-10, a notice will be issued in GSTR-3A, asking them to file their final return, within 15 days from the receipt of such notice.
• Where the taxpayer does not comply with the notice, strict actions be taken to assess their liability.

PROCEDURE

1. SHOW CAUSE NOTICE: Where the proper officer has a valid reason for the cancellation of the registration of a person, the said person shall be served with a show cause notice in form GST REG-17.
2. THE REASON FOR VIOLATION: The said person, shall provide the reason for violation of the provisions, in the form REG–18 and the same be filed within 7 days from date of service of notice.
3. REGISTRATION CANCELLATION ORDER: In case the proper officer is convinced and satisfied with the reply, he shall pass an order for terminating the proceedings for registration cancellation, and the said order be made in form GST REG–20.
4. GST OFFICER SHALL MAKE AN ORDER: However, in case the reply is not satisfactory, or the taxpayer don’t provide a reply within the specified time period, the proper officer shall make an order in form GST REG-19, for the cancellation of the registration of the said person.

ACTIVATION OF CANCELLED REGISTRATION

• In case the taxpayer is requiring the activation of the cancelled registration, he shall file an application for Revoking a Cancelled GST Registration, provided the registration was cancelled by the officer voluntarily.
• Such an application be filed within 30 days from the date of cancellation by the GST authority. However, where the cancellation was ordered due to failure in filing GST returns, the taxpayer can apply for revocation only after filing the required GST returns and pay the amount of tax as applicable, along with the amount of interest, penalty and late fees, levied for delay in filing.
• The GST Officer, after receiving the application, shall verify the reasons for revocation, and where the officer is satisfied with the reasons provided, the officer shall pass an order for revocation of the cancellation of registration.

PROCEDURE REVOCATION OF GST CANCELLATION

1. The taxpayer, whose registration has been cancelled, shall file an application for revocation of cancellation in the form GST REG-21, provided the said cancellation was made Suo motoby the proper officer.
2. The said application be filed by the taxpayer, within 30 days from the date of service of cancellation order.
3. Where the proper officer is satisfied with the reasons provided, he shall make an order to revoke the cancellation and the order be made in Form GST REG-22, within 30 days from the date of receipt of the application.
4. However, where the application is rejected by the proper officer, the same be ordered in form GST REG-05 and be communicated to the applicant.
5. Before rejecting the application, the proper officer is required to issue a show cause notice in form GST REG–23, to the applicant providing further reason for non-rejection of application.
6. The said reason be furnished by the applicant in form GST REG-24 within 7 working days from the date receipt of show cause notice.
7. The proper officer is required to take a final decision, within 30 days from the date of receipt of clarification, and the order be passed in form GST REG-24.

SUO MOTO REGISTRATION & ITS CANCELLATION

As per section 25(8) of the CGST Act, 2017, where any person liable to get registered under the GST Act, fails to do so, due to any valid reason, and the said person comes into the notice of any officer, during a survey, inquiry, inspection, shall be granted a Temporary ID, generated by the officer who noticed such non-compliance.

During such proceedings, the Tax Officials is required to collect the amount of tax from the unregistered persons and shall initiate a Suo Moto GST Registration for such person. Such an order should be made in Form GST REG-12.

CONDITIONS

1. The temporary registration ID generated in the name of the unregistered person, shall be effective from the date of passing of order by the officer.
2. Such a person would be required to file an application for registration, within 90 days from the grant of temporary registration.
3. However, the unregistered person can also file an appeal against the order for grant of temporary registration. The Appellate Authority shall uphold the ruling where sufficient evidence is provided, provided such an appeal is made within 30 days from the date of ruling.

WAYS OF GENERATING TEMPORARY ID

• The officer can use his interface of the GST Portal, and provide the relevant details of the unregistered person. By completing the form, a Temporary ID will be generated and issued in the name of the registered person.
• In case the Enforcement activities are carried out outside the designated office, the Suo Moto Registration can be initiated using the registered mobile.

GSTIN -TEMPORARY ID

Temporary ID is basically a 15 characters number generated in a form similar to GSTIN. The number constitutes of the following cades –

• The first 2 digits indicate the State Code where the person is operating.
• The next 2 digits indicate Year in which such temporary ID is granted.
• The next 8 digits would be a unique serial number. For each of new financial year, the serial number starts with number 1.
• The last 3 digits include the TMP.

TEMPORARY ID & PASSWORD

• Where an order is made for temporary ID, an SMS and e-mail is sent by the authorities, to the unregistered person, consisting of Temporary ID and password.
• The person shall use the ID and password, to login into the GST Portal – www.gst.gov.in. after successful login, the person can undertake various activities like – payments, notices, orders, registration in respect of GST.

TEMPORARY REGISTRATION WITH UPDATED PROFILE

It is to be noted, that the person to whom temporary registration is granted, shall apply for GST Registration Process and get new registration in their own name. only after successful registration, all the facilities will be available.

COMPULSORY REGISTRATION

It is provided that a temporary ID is only a temporary registration. Thus, the person is required to apply for new registration under GST, within 90 days from the grant of the temporary ID. The application for registration be made in the form and manner provided in rule 8 in case of normal taxpayers or rule 12 in case of TDS and TCS deductors.

In the Part B of the New Registration Application, the applicant shall file the Temporary ID in the section of Existing Registrations.

UPDATION OF MOBILE NUMBER

It is to be noted that the person to whom temporary registration is granted, shall not update their mobile number on which the temporary ID is granted.

AMOUNT DEPOSITED WITH THE OFFICER

As discussed above, an amount is required to be deposited by the unregistered person, with the tax officer. Such amount deposited at the time of Suo Moto registration, is credited in a liability register. After getting new registration, such amount can be utilized for setting off the liabilities arising after registration.

PAYMENT OF TAX

1. By the Tax Officials – the officer shall collect the tax from the unregistered person and deposit the same with the authority. They would be required to log into their Interface on the GST Portal and apply for Suo moto registration. After depositing the money, a Challanbe also generated and the money be deposited in the requisite bank account.
2. By the Unregistered Person – the person can make the payment of taxes, after receiving the Temporary ID and password. For this, they would be required to login into the GST portal using the credentials provided and generate a challan for the payment of tax.

CANCELLATION OF SUO MOTO REGISTRATION

The Tax Officials can initiate the process for cancellation of Suo Moto registration where any of the following events take place –

1. The Taxpayer to whom such temporary registration was granted, did not apply for New GST registration within 90 days from the date of grant of Suo moto registration.
2. The person registered their business, by means of fraud, suppression of facts or intentional misstatement.
3. Taxpayer has not filed their required returns for a continuous period of six months. In the taxpayer is a Composition taxpayer, the said period is of three continuous tax periods.
4. The taxpayer supplied goods or services without issuing an invoice for the same.

1. The taxable person is issuing invoices or bills without undertaking any supply of goods or services, which is termed as a violation of the GST Act and GST rules, with an intention to evade tax.

6. The taxpayer has collected tax but the same was not deposited with the Government, within 90 days from the grant of Suo moto registration.
7. The person has not paid any amount of tax, interest or penalty.
8. Any sought of misconduct has been observed during any proceeding under the GST Act.
9. The unregistered person is not liable to deduct TDS or liable to get registered under GST.

1. The business is transferred due to merger, amalgamation, de-merger, sale, or leasing of the business.
2. The person to whom the registration was granted, is not required to take registration under GST.
3. Death of the taxpayer, in case of sole proprietorship.

LIABILITY AFTER CANCELLATION OF SUO MOTO REGISTRATION

It is to be noted, that were any liability exist on the part of the taxable person, before cancellation of Suo Moto registration, the same shall be required to be paid by the taxpayer.

 

1. The Taxpayer will be informed about the cancellation of registration, through SMS and Email.
2. The order passed for cancellation, shall be available on the dashboard of the taxpayer on the GST Portal.
3. Status of the GSTIN of the said person will be reflected as “Inactive” on the GST portal.
4. Any return or Invoice will cease to be uploaded on the GST Portal, and the taxpayer will not be able to carry out any facility related to GST.

CLARIFICATION ON ORDER OF CANCELLATION

• As discussed above, where an order for cancellation of Suo moto registration is made, a show-cause notice is sent to the requisite person, and the said person is required to provide their reason within 7 days of service of notice.
• In case the officer is satisfied with the response, he shall make an order for termination of the proceeding of cancellation and the taxpayer will be informed by the same, by means of SMS & Email.
• The order will be uploaded on the GST portal and the same can be viewed and downloaded by the taxpayer, by logging into their dashboard. Their GSTIN status will become Active.

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