GST Suspension: Government is focusing on making the GST taxation laws more stringent than ever before. A failure to comply with GST regulations may lead to the cancellation/suspension of GST registration which one cannot afford to let happen as it is not lawful to make any taxable supply after the suspension of GST Registration. Many have questions like how to revoke GST suspension, effects of GST Registration suspension, what to do when GST number suspended, GST suspension revocation rules and procedure. So, let us take a more in-depth look at the reasons and possible measures to help you deal with this GST registration suspension situation.
What is Suspension of GST Registration?
In layman terms, Suspension means “on hold”. With the suspension of GST registration, a taxpayer will not be able to make taxable supply. Suspension of GSTIN It is one step before of cancellation.
Reasons of Cancellation/ Suspension of GST Registration
As a taxpayer, you may wonder why a GST registration may be cancelled or fear of getting your registration suspended. However, it is to be noted that no registration is cancelled without valid reasons. So, it becomes very important to be extra-cautious to watch out for any possibility of GST Registration cancellation. Here are some of the reasons why your GST registration may be suspended-
1: In case there is a change in the constitution of your business.
2: In case a business is discontinued, transferred, merged or closed down.
3: It may be suspended if the taxpayer fails to abide by the provisions of the CGST Act.
4: The taxpayer may voluntarily apply for a cancellation of registration, and in that case, the proper officer may put the GST into suspension.
5: If the GST registration was obtained using fraudulent methods, the officer has the right to suspend the registration.
6: Registration also gets suspended if it is found out that the business is being operated from a place other than the one mentioned.
7: As per GST regulations, a failure to start the business within six months of GST registration may lead to a cancellation/suspension of the registration.
8: If the taxpayer is found to be issuing invoices without supplying goods or services.
9: When the taxpayer fails to furnish valid bank account details, the registration can be suspended after a warning.
10: If a person who is covered under the composition scheme has not furnished his returns for 3 continuous tax periods.
11: In case a person conducting business, other than under the composite scheme, has not furnished the returns for a period of six months.
12: If a composition taxable person fails to file an annual return for three months beyond the due date of 30th April of the following year.
13: If a proper officer finds any discrepancies:
- On comparing details of outward supplies furnished under Form GSTR-1 and Form GSTR 3B
- On comparing details of inward supplies reflecting in the Form GSTR-2B with the Form GSTR-3B
- Any other analysis
Understanding GST Registration suspension
An authorised officer can only suspend registration if he has reasons to consider that the registration is liable to be cancelled. The officer may offer a warning or a chance to rectify the situation before the GST is suspended.
Effect of Consequences of GST Suspension
A person whose registration has been suspended:
- Cannot make any taxable supply after suspension.
- Is not required to file any returns as required under section 39 of the CGST Act, 2017. Reduction in compliance burden is the main benefit enjoyed by the taxpayer until the suspension of GST registration.
- No refund can be granted under Section 54, during the suspension of the registration.
The taxpayer is intimated through Form GST REG-31 regarding discrepancies. The form also mentions that GST may be cancelled if the taxpayer does not provide a valid explanation. Further, the officer can still order a suspension if, in his opinion, the explanation is found to be incomplete or unsatisfactory.
What to do after GST Registration Suspension?
If your GST registration has been suspended, you must immediately contact an assessing officer and request for activation of GSTIN. A failure to do the same in time can lead to cancellation of registration and further penalties due to non-compliance with GST regulations.
In case the taxpayer has not voluntarily applied for cancellation of registration and yet have received a notice, here are some of the things you can consider-
1: On receiving a notice for discrepancies
If a taxpayer receives a notice for discrepancies, he needs to furnish a reply to the tax authority within one month of receiving the notice. The reply should include details of all the corrective measures and actions taken to comply with the non-compliances and the reasons as to why the registration should not be cancelled.
2: On receiving a notice of cancellation
In this scenario, one needs to reply to the tax officer using Form GST Reg 18 online through the official GST portal within one month of getting the notice.
3: Receiving a notice due to non-filling of returns
Non-filing of returns is the most common scenario. If the notice for suspension or cancellation of registration is issued on the ground of non-filing of returns, the said person may file all the due returns and submit the response.
How to activate GST suspended Registration?
As a registered taxpayer, you can apply for reactivation of your GST registration as per GST laws within 30 days. But this can only be done when an authorised GST officer suspends the registration. There is no doubt that the rules for suspension provide relief to taxpayers to some extent as compared to cancellation of GST number.
The government has streamlined the process, but it is still advisable to take the help of a professional for revoking the suspended GST registration. A consultation with a GST professional or a certified CA can help you stay under compliance and get possible remedies to deal with the suspension of GST registration without going through much trouble.
Application for Revocation of GST Suspension Registration
To revoke or cancel their GST registration online, taxpayers must follow the instructions listed below.
- Visit the GST website and login with “Username” and “Password”.
- Go to Services, then GST Registration and click application for Revocation of Cancelled Registration.
- You will be redirects to new page, provide the reason in the ‘Reason for revocation of cancellation’ box.
- Then, to attach any supporting documents, click the “Choose File” option.
- Now check the box next to Verification.
- In the name of Authorized Signatory drop-down list, choose the name of the authorised signatory, enter the place.
- Use the Submit with DSC or Submit with EVC buttons to submit the application.
- The system will produce the ARN and display a confirmation message. Your registered mobile phone number and e-mail address will also get a confirmation message from GST Portal.
- You can also store the application form and retrieve it later by clicking the ‘save’ option.
Approval from the Tax Office
- After acquiring the necessary information and being satisfied with it, the relevant authorities may decide to revoke the cancellation of the GST registration.
- Based on the Tax Official’s approval, the system generates an approval order and informs the applicant via email and SMS.
- If the Application for Revocation of Cancelled Registration is accepted, the taxpayer’s GSTIN Status will change from Inactive to Active as of the cancellation’s effective date.
Rejection by the Tax Office
- The Tax Official issues the rejection order after denying a request to reinstate a cancelled registration.
- The taxpayer will receive information from the Primary Authorized Signatory through SMS and email that the application has been denied, and the GSTIN status on the GST Portal will remain “Inactive.”
- Access to the Rejection Order receipt is available on the taxpayer’s dashboard.
Functionality of “Automated Drop Proceedings”
Recently, a functionality of “Automated Drop Proceedings” of GSTINs suspended due to non-filing of returns has been implemented on the GST Portal. This functionality is applicable to the taxpayers whose GSTINs have been suspended after December 01, 2022. This functionality is available for the taxpayers who have filed their pending returns i.e. 6 monthly or 2 Quarterly returns.
1. If such taxpayers have filed all their pending returns, the system will automatically drop the proceedings and revoke suspension.
2. If the status of the GSTIN does not automatically turn ‘ACTIVE’, then taxpayers are advised to revoke the suspension once the due returns have been filed, by clicking on ‘Initiate Drop Proceeding’ for which navigation is as follows:
“Log on to GST Portal > Services > User Services > View Notices and Orders > Initiate Drop Proceeding”
3. In case the system does not automatically drop the proceedings or taxpayer is unable to revoke the suspension by clicking on ‘Initiate Drop Proceeding’, then taxpayer is advised to contact Jurisdictional Officer.
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