Taxpayers who have already registered under the Goods and Service Tax Act can apply for cancellation of GST registration any time if they think they should close their business or in case any situation arises. Once the registration is cancelled, it is no longer required to pay tax or collect tax from ordinary people.
What will happened once registration is cancelled?
- The Taxpayer cannot collect GST and is no longer required to pay GST.
- There will be no requirement of furnishing any GST return.
- 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 GST registration?
A Proper officer under GST can either himself if he may consider necessary to do so, or an application filed by the registered person or by legal heirs of the registered person, in case of death of such person, can cancel the GST registration of the taxpayer.
However, it is to be noted that once the person obtained GST registration voluntarily he cannot apply for GST Registration cancellation before the expiry of a one year from the effective date of registration.
Prior to the cancellation of registration, the officer would issue a notice to such person whose GST registration is liable to be cancelled, requiring show cause within seven working days from the date of service of such notice as to why the GST registration should not be cancelled. The registered person can reply to the show cause notice within the prescribed time, or the GST registration can stand cancelled.
Read Also: Change in GSTIN Registration Details
Cancellation or Suspension of Registration (Section 29)
(1) The proper officer may cancel the registration, either on his own motion or an application filed by the registered person or by his own legal heirs, in case of death of such person, as per the Rules having regard to the circumstances where:
- the business has been discontinued, transferred fully for any reason including Death of the proprietor, amalgamated with other legal entity, demerged or otherwise disposed of; or
- there is any change in the constitution of the business; or
- the taxable person, other than the person registered under sub-section (3) of Section 25, is no longer liable to be registered under section 22 or section 24.
Provided that during pendency of the proceeding relating to cancellation of registration filed by the registered person, the registration may be suspended for such period and in such manner as may be prescribed.
(2) The proper officer may cancel the registration of a person from such date, including any retrospective date, as he deems fit, where,
- a registered person has contravened such persons of the Act or the rules there under as maybe prescribed; or
- a person paying tax under section 10 has not furnished returns for three consecutive tax periods; or
- any registered person, other than a person specified in clause (b), has not furnished returns for a continuous period of six months; or
- any person who has taken voluntary registration under sub-section (3) of section 25 has not commenced business within six months from the date of registration; or
- registration has been obtained by means of fraud, wilful misstatement or suppression of facts
Provided that the proper officer shall not cancel the registration without giving the person an opportunity of being heard.
(3) The cancellation of registration under this section shall not affect the liability of the person to pay tax and other dues under this Act or to discharge any obligation under this Act or the rules made thereunder for any period prior to the date of cancellation whether or not such tax and other dues are determined before or after the date of cancellation.
(4) The cancellation of registration under the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act, as the case may be, shall be deemed to be a cancellation of registration under this Act.
(5) Every registered person whose registration is cancelled shall pay an amount, by way of debit in the electronic credit ledger or electronic cash ledger, equivalent to the credit of input tax in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock or capital goods or plant and machinery on the day immediately preceding the date of such cancellation or the output tax payable on such goods, whichever is higher, calculated in such manner as may be prescribed:
Provided that in case of capital goods or plant and machinery, the taxable person shall pay an amount equal to the input tax credit taken on the said capital goods or plant and machinery, reduced by such percentage points as may be prescribed or the tax on the transaction value of such capital goods or plant and machinery under section 15, whichever is higher.
(6) The amount payable under sub-section (5) shall be calculated in such manner as may be prescribed.
GST Forms for cancellation
The taxpayer must apply through 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 FORM GST REG-19 within 30 days from date of application. The cancellation will be effective from a date determined by the officer and he will notify the taxable person
- Cancellation by a registered individual – Form GST REG 16
- Issue show cause notice for cancellation – Form GST REG 17
- Reply to show cause notice – Form GST REG 18
- Order for dissolution – Form GST REG 19
- To stop the cancellation proceedings – Form GST REG 20
- Explanation form to stay proceedings – Form GST REG 18
- Application for revoking the cancellation – Form GST REG 21
- Order revoking the cancellation – Form GST REG 22
Revocation of cancellation of registration (Section 30)
Understanding Revocation of Cancellation of Registration Certificate
Revocation of cancellation of registration Certificate means that the decision to cancel the registration has been reversed and the registration is still valid.
When is revocation of cancellation of registration Certificate is applicable
This is applicable only when the tax officer has cancelled the registration of a taxable person on his own motion. Such taxable person can apply to the officer for revocation of cancellation within thirty days from the date of the cancellation order.
Time Limit for Revocation
Any registered taxable person can apply for revocation of cancellation of GST registration within a period of 30 days from the date of service of order of cancellation of GST registration.
Application for Revocation
Application in FORM GST REG-21 needs to be filed by the registered person, for revocation of GST registration, either directly or through a facilitation center notified by the Commissioner.
For any questions, you may reach us at Discussion Forum
The author of above article is Praveen Singh. He is a Founder and Managing Partner of TRIJURIS (Legal & Taxation Service Provider in Delhi). Email id: [email protected]
The head office of the firm is based in Delhi. The firm inter-alia engaged in providing services related to Corporate and Commercial laws advisory, Indirect taxation, Setting up industries in India as well as outside India, Legal recovery services and other regulatory matters. The firm has actively participated in assisting MSMEs in India and small businesses to scale there business and closing working with them in respect of recovery of their legitimate dues.
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