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The cancellation of GST registration means that the registered person as a taxpayer will not be a GST registered person anymore. In consequence thereof, he/she is not entitled to pay or collect GST. Further, any business, which by virtue of its nature mandatorily requires a GST Registration, cancellation of GST registration would mean either discontinuance of business or if the business is continued it may amount to an offence under the Law.
Central Board of Indirect Taxes and Customs (CBIC) issued Circular Nos. 69-72, dated 26.10.2018, in order to clarify various issues relating to the cancellation of the registration certificate. It provided that a Registration Certificate can be canceled provided certain conditions are met. The basic rules are:
Any registered person except those liable to deduct Tax Deducted at Source (TDS) or Tax Collected at Source (TCS) or any who has a registered Unique Identification Number (UIN) can apply for cancellation of Registration Certificate through GST FORM REG 16 within 30 days of the occurrence of an event which necessitates the cancellation.
The GST officer is bound to accept all such applications within 30 days, except in cases of an incomplete application or where a new entity has been formed which has not obtained registration before the cancellation of the present one.
Thereafter, the person whose Registration Certificate is canceled is bound to file Form GSTR-10 for final return within 3 months from the date of cancellation or the date the order of cancellation was issued.
The person applying for cancellation of Registration Certificate is liable to pay tax on finished or semi-finished goods and other stock maintained up until the last day preceding the cancellation of the registration certificate.
Lastly, if the applicant does not file the final Return Form within the prescribed time, despite a notice by the authorities, an assessment order to determine the liability of the applicant can be issued against him.
What are the consequences of the cancellation of GST Registration?
What if the period of “occurrence of the event warranting the cancellation” is over?
Who can apply for the cancellation of GST Registration in India?
Grounds for cancellation of GST Registration
What is the process to cancel GST Registration in India?
GST cancellation when turnover is less than 20 lakhs
Cancellation by the taxpayer in other cases
Why does a taxpayer wish to cancel his registration?
Information Required to fill the cancellation form
Forms for cancellation
Cancellation by tax officer - Why will the officer cancel the registration?
Procedure to cancel GST Registration by the tax officer.
Pending Tax Liability
What is a revocation of cancellation?
When is a revocation of cancellation applicable?
The procedure of revocation of GST cancellation.
Grounds of non-acceptance of cancellation application
What happens when the registration is obtained by means of willful misstatement, fraud or suppression of facts?
The Registered Person is not allowed to pay or receive GST once the cancellation of GST Registration is obtained.
However, if for the business still in continuance, where GST Registration was mandatory in nature, the consequences include penalty or fine for the commission of an offence under the Central Goods and Service Tax Act, 2017.
It has been clarified by CBIC by virtue of Circular No. 69/43/2018 that the stipulated 30-day deadline in respect of the “occurrence of the event warranting the cancellation” should not be given a strict interpretation. It requires a liberal interpretation as it is difficult to ascertain the start or the end-date. The application should not be rejected for a delay of a few days and technicalities. However, any unreasonable long delay, not accounted for vitiates the Application. The aforementioned interpretation is subject to the facts and circumstances of the case.
GST registration is not perpetual in nature i.e. once granted it can be canceled by:
Grounds for cancellation of GST Registration by a GST Officer are:
No business is being conducted from the place of business so declared by the registered taxable person; or
The registered person has issued an invoice or bill in violation of the GST Act or Rules, without actual supply of goods or services; or
There has been a default in filing GST Returns by the person so registered for a period exceeding six months.
The rules of natural justice and procedure so laid down require that a notice should be issued to the person whose registration is sought to be canceled to offer him an opportunity to show cause and reasonable opportunity of being heard within seven working days from the date of service of such notice. If no reply is tendered within the prescribed time, the GST Registration can be canceled by the Officer.
Discontinuance or closure of the business of the registered person;
Major changes in the business or the structure thereto including but not limited to merger, split, transfer, lease, amalgamation or other reasons;
Vital changes are made in the constitution of business, which in turn results in a change of PAN;
Reduction in turnover touching the threshold limit required for GST Registration;
In the case of sole proprietor, on the event of his/her death;
Any other reason, which can be justified in the application for cancellation of GST Registration.
The step-wise guide for cancellation of GST Registration on the online portal is as follows:
STEP 1: You need to visit the official GST website on https://www.gst.gov.in/ and login to your account with your username and password. If you are a new user, you can sign up with your Provisional ID/ GSTIN/ UIN and create your own password.
STEP 2: Once you have logged in you will see a drop-down on your dashboard under the service option. Click on Registration and then select Application for Cancellation of Registration.
STEP 3: There options will now appear on your screen i.e.:
STEP 4: Fill the Basic Details required. Once completed, click on the Save and Continue Button and proceed to the next page of Cancellation details.
STEP 5: The form requires you to enter the legal name of the business along with the reason for cancellation. Information required to fill the cancellation form has been dealt with further in this Article. Six pre-determined reasons will appear in the box. Choose the one that suits your case.
Change in the constitution of business entity which has lead to a change in the PAN;
The person has ceased to be liable to pay tax;
Death of Sole Proprietor;
Discontinuance or Closure of business so registered under GST Registration.
Transfer of business owing to amalgamation, merger, sale or otherwise;
Any other reason.
Further, in the end, the form asks whether you have any GST Invoice for the current month. Choose yes or no as per your case. If you choose “Yes” a warning will appear directing you to fill the cancellation form in GST REG-16. This process is only applicable when no invoice is issued for a particular month. On filling of the aforementioned form, a Proper officer shall look into the Application and pass an order for cancellation of Registration of GST within 30 days if deemed appropriate.
STEP 6: Once the form is complete with the reason and details, a verification option will appear on your screen. You need to fill in the name of the authorized signatory, their designation or status, place, and date of making the declaration in regards to the true and correct nature of the information. If you are a Company or a Limited Liability Partnership, it is mandatory for you to furnish a Digital Signature Certificate. An OTP will then be generated on submission of the form.
STEP 7: Submit the OTP. Application for Cancellation of GST Registration is successfully submitted.
A person is not bound to obtain GST Registration if the turnover is less than 20 lakhs. However, they may obtain a Voluntary Registration. Further, under certain circumstances, they are bound to obtain registration, even if the annual turnover is less than 20 lakhs i.e. if they are making inter-state supplies, or are non-residents, or dealing in non-exempted goods or other mandatory conditions provided for.
Voluntary registration can be canceled by the Process aforementioned, wherein the reason for Cancellation will be “Turnover less than 20 Lakhs”. In other cases, the cancellation can be by a GST Officer or voluntarily or by legal heirs in accordance with the procedure already elaborated upon.
There can be various reasons or circumstances owing to which a taxpayer wishes to cancel his registration, namely:
Discontinuance of the business for which GST Registration was obtained; or
Transfer/ Merger/ Amalgamation/ Split of business giving birth to a new entity that is supposed to be registered. In such circumstances, to avoid multiple taxation and confusion for an entity which has ceased to exist, the taxpayer may seek cancellation of the previous Registration and obtain a new one; or
Major Change in the constitution of the business, which brings a change in liability or structure. If a Private limited company changes to a Public limited company, the liability is affected and a new registration is sought; or
Any other reason deemed justified or fit according to the circumstances of the case.
While filing the Cancellation form, you need to furnish the following information:
Name, Address, Registered Email-id and Registered Mobile Number for the GST Registration Number sought to be canceled;
The event warranting the cancellation or the Primary reason along with the desired date for cancellation;
Detailed information and particulars of goods on which tax is due or payable including semi-finished and finished goods, stock and capital. This is the filing of tax liability approximated to a certain value;
Further, Electronic Cash ledger or Electronic Credit ledger has to be filled in with correct details and amount to set off the tax liability aforementioned;
Particulars of the last return filed by the person seeking to cancel GST registration.
In cases, where there is a merger or transfer or any event which leads to the birth of a new entity, details of registration and GSTIN of such entity need to be furnished. This clause is not applicable in all cases of cancellation.
Forms for cancellation of GST Registration:
Form GSTR-10: Final Returns
Form GST REG 16: Cancellation Application by a Registered Taxpayer.
Form GST REG 17: Issuance of show cause notice for cancellation.
Form GST REG 18: Reply to show cause notice aforementioned.
Form GST REG 19: Order for dissolution.
Form GST REG 20: To put a stop to the cancellation proceedings of GST Registration.
Form GST REG 18: Explanation form attached to the stay proceedings.
Form GST REG 21: Application for revoking the cancellation GST Registration.
Form GST REG 22: Order to revoke the cancellation of GST Registration.
If any grounds that have been aforementioned are established or the Tax Officer has a reason to believe, he can proceed with the application for cancellation of the GST Registration suo moto. He is bound to observe rules of natural justice and procedure.
STEP 1: The ground for cancellation needs to be determined.
STEP 2: A notice should be issued to the person whose registration is sought to be canceled to offer him an opportunity to show cause and reasonable opportunity of being heard.
STEP 3: The person so concerned needs to submit a reply as to why his registration should not be canceled within seven working days from the date of service of such notice. If no reply is tendered within the prescribed time, the GST Registration can be canceled by the Officer.
STEP 4: If a reply has been furnished by the person, the Proper officer will look into the reasons and decide whether the registration should be canceled.
Any pending tax liability under the GST Regime does not per affect the process of cancellation of GST Registration. However, the fact that you have applied for cancellation of your GST Registration does not absolve you from the pending tax liability. You have to clear the liability before the Cancellation is granted to you.
To revoke means to officially cancel a decision or to restore the position as it were before. Revocation of cancellation here means that the decision of Cancellation of GST Registration is reversed, restoring the position as it were before such cancellation. Thus, it means that the GST Registration is still valid and holds good in the eyes of law.
Revocation of Cancellation of GST Registration is not applicable when the application was moved by an individual voluntarily or by his legal heir, on his behalf in the event of death. It can only be revoked when the Cancellation proceeded from the GST Officer on his own motion. The prescribed time period for revocation is thirty days from the date of passing of the Cancellation Order by the GST Officer.
At the outset, it is pertinent to note that the application for revocation of cancellation cannot be filed by any person whose registration was canceled owing to failure to file tax returns. Such a person is only allowed to file an application after clearing of tax dues along with interest and penalty.
The step-by-step procedure to be followed is:
Submission of Application in FORM GST REG-21 by the Affected Person whose GST Registration has been canceled by the GST Officer suo moto and who desires the Revocation of the Cancellation Order.
The Application for Revocation should be submitted within thirty days of service of the Cancellation order.
On the satisfaction of the proper officer that the revocation is justified, the cancellation of registration can be revoked by an order in the format of FORM GST REG-22. The action should be taken within 30 days from the date of receipt of the Revocation Application. It is pertinent to note that the reasons and grounds for revocation of cancellation of registration must be recorded in writing to ensure it is a reasoned order.
If the proper officer is not satisfied, he can reject the application for revocation by an order in the format of FORM GST REG-05. The order of rejection must be communicated to the applicant.
Before rejecting or accepting the application, the proper officer concerned is bound to issue a show-cause notice in FORM GST REG–23. The Applicant then needs to provide reasons and prove as to why the application for Revocation of Cancellation should not be rejected by a reply within 7 working days of service of the show cause notice.
The proper officer is bound to dispose of the application within 30 days from the receipt of such reply to show cause notice.
The application is incomplete;
A new entity has been formed by virtue of merger or amalgamation or change in business structure otherwise, which has not yet obtained registration
Where GST Registration is obtained by fraud, misrepresentation or any suppression of facts, an offence is committed under the Central Goods and Service Tax Act, 2017. The person who commits the offence, as well as the person who aids in the commission of such fraud, is liable to pay a fine and are penalized. An offender has to pay 100% Penalty, the minimum amount being INR 10,000/-.
Can GST Registration be canceled when Turnover is less than 20 lakhs?
Yes, you can get your GST Registration canceled vide notification/Circular of GSTIC dated 23/01/2018. Legally, you are generally not bound to register if your turnover is less than 20 Lakhs except if you fall under the category of mandatory registration. Any such Voluntary or mandatory registration is allowed to be canceled if the requirements are met.
Who Cannot File for the GST Cancellation?
Taxpayers who are registered as tax deductors or tax collectors.
Taxpayers who have been allotted the UIN.
How long does it take to cancel?
The time period prescribed for the Officer to pass an order in the cancellation process is 30 days from the date of submission of application. However, in the event of pending tax liability, or other situations, the process may take a few more days.
Should we still file the GST returns in the transition period?
Yes, you should file GST returns in the transition period. Further, the person whose Registration Certificate is canceled is bound to file Form GSTR-10 for final return within 3 months from the order of cancellation. Failure to do so leads to the passing of an assessment order by the GST Officer.
How to activate canceled GST registration?
Activation of canceled registration implies revocation of canceled registration. If the cancellation was voluntary in nature or applied for by the legal heir, it cannot be re-activated. However, if canceled on erroneous grounds or without adhering to the procedure or any other reason by the Proper Officer, you can file an Application in the format of FORM GST REG-21. The entire procedure to file for activation of canceled GST Registration has been dealt with in the article.
Can I cancel the GST registration without filing returns?
No, you cannot cancel your GST Registration without filing returns. It is mandatory for you to file returns even when there has been no business transaction. Until the dues are cleared on your end, the cancellation of registration is not finalized.