Cancellation of GST Registration
The Goods and Service Tax, also called GST, was established on July 1, 2017, to make doing business more accessible and provide individuals with more tax benefits. The government’s new indirect tax policy automates the system by decreasing manual intervention and facilitating a quick procedure. As a result, GST has numerous advantages, and the deletion of the GST Registration number is one such automatic operation. Let’s look at why the GST cancellation process is necessary and how to apply for it.
Cancelling a GST registration
GST registration cancellation indicates that the taxpayer is no longer a GST registered individual. He is not liable to pay or collect GST or claim the input tax credit and won't have to file GST reports.
GST registration cancellation reasons
For the following circumstances, your registration may be cancelled:
- a person who is registered under any other law but is not required to register under the mentioned GST Act;
- Either the business is discontinued, or transferred fully for any reason, including the death of the proprietor, amalgamated with another legal entity, demerged, or otherwise disposed of;
- the taxable person (other than a person who has voluntarily taken registration under sub- section (3) of section 25 of the GST Act);
- the taxable person (other than a person who has voluntarily taken registration
- a registered person have violated the provisions of the Act or rules promulgated thereunder;
- any registered person, other than a person paying Composition levy, didn't furnish returns for three consecutive tax periods;
- any registered person, other than a person paying Composition levy, has not furnished returns for a continuous period of six months;
- 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;
- registration has been obtained through fraud, willful misrepresentation, or deception
The repercussions of cancelling your GST registration
The taxpayer will not be obligated to pay GST if the GST number is deleted, and you will be unable to claim GST credit. GST registration is required for certain types of businesses. They will be punished with an offence and penalties if they cancel their GST registration and continue to operate their firm.
Who has the option to cancel GST registration?
By completing the GST cancellation method, the taxpayer can cancel his GST registration independently. Suo moto cancellation is the term for this.
- If any errors are discovered, the competent officer has the authority to terminate the GST registration.
- A person's legal heir can also cancel it in the event of death.
Cancellation of GSTIN for Migrated Taxpayers
It is mandatory for every person previously registered under indirect tax regulations to migrate to GST. However, certain people may not have been required to register for GST. For example, in most states, the VAT and Service Tax thresholds were Rs.5 lakhs and Rs.10 lakhs, respectively, whereas the GST barrier is Rs 20 lakh*. But, they had to make sure they weren't making interstate supply since interstate suppliers must register except the service providers.
*Rs 40 lakh in case of a supply of only goods in some states or Rs 10 lakh in certain special category states/Union Territories. Such a taxpayer has to submit an application electronically in GST REG-29 at the GST portal.
*Rs.40 lakh in some states for a supply of solely products, or Rs.10 lakh in some special category states/Union Territories. Such a taxpayer was required to submit an application to the GST portal in the Form GST REG-29.
Here are the steps for migrating taxpayers to cancelling their GSTIN on the GST Portal:
To provide LUT on the GST Portal/GSTN, complete these steps:
- Step 1: Here are the steps for migrating taxpayers to cancelling their GSTIN on the GST Portal:
- Step 2:
- A page for cancellation appears.
- Your GSTIN and business name will appear immediately.
- You must provide a reason for your cancellation.
You will be questioned if you have issued any tax invoices throughout the month.
Enter the names and locations of authorised signatories. Finally, if you are a sole owner or a partnership firm, sign off with EVC. DSC is required of all LLPs and corporations.
Note: This service is available to taxpayers who have not yet issued tax invoices. On issuing a tax invoice by a taxpayer, the taxpayer must complete FORM GST REG-16. Please see the list below.
What makes a taxpayer want to get rid of his registration?
- The company has ceased operations.
- The business has been fully transferred, amalgamated, demerged, or otherwise disposed of — the transferee (or the new company formed through amalgamation/demerger) must register.
- If the transferor goes out of business, the registration will be cancelled.
- There has been a change in the company's structure.
(Example- A private limited company has turned to a public limited company)
Cancellation of documents
Those who cannot use the preceding procedure must submit a cancellation request using GST REG 16. The lawful heirs of a deceased taxpayer will proceed in the same manner as described below.
- Form GST REG 16 will be used to file a cancellation request.
- Details of inputs, semi-finished, and finished items kept in stock on the day cancellation of registration is applied must be given in form GST REG 16.
- Liability for it
- Payment information
- The proper authority must issue a cancellation order in GST REG-19 within 30 days of receiving the application.
- The cancellation will take effect on a date set by the officer, and the taxable person will be notified.
Cancellation by a Tax officer
Why will the officer refuse to register?
The registration can be revoked if the taxpayer (a) does not conduct business from the declared place of business, OR (b) issues an invoice or bill without providing goods or services (i.e., in violation of the provisions) OR (c) violates the anti-profiteering provisions (for example, by not passing on the ITC benefits to customers) OR (d) violates the anti-abuse provisions (for example, by not passing on the ITC benefits to customers) OR With effect from January 1, 2021, (d) Using ITC from the computerised credit ledger to discharge more than 99 per cent of the tax debt for selected taxpayers who violate Rule 86B – with a total taxable value of supply exceeding Rs.50 lakh in the month, with some exclusions. OR
(e) A taxpayer who is unable to file GSTR-1 because GSTR-3B has not been filed for more than two months (one quarter for those who choose the QRMP scheme) OR (f) A taxpayer who receives an input tax credit in violation of section 16 of the Act or the rules.
- If the proper officer reasons to terminate a person's registration, he will issue them a show- cause notice in the Form GST REG-17.
- Within seven days after receiving the notice, the person must respond in form REG–18 explaining why his registration should not be cancelled.
- If the response is acceptable, the proper authority will dismiss the case and issue an order GST REG–20.
- The relevant officer will issue an order in GST REG-19 if the registration is liable to be cancelled. The order will be sent within 30 days of receiving the show cause response.
(Example- A private limited company has turned to a public limited company)
Revocation of cancellation of registration
What is cancellation revocation?
The official cancellation of a decision or pledge is known as a revocation. Revocation of cancellation of registration indicates that the cancellation decision has been overturned, and the registration remains valid.
When to revoke a cancellation?
This only applies when a tax officer cancels a taxable person's registration on his initiative. The taxable person can petition the officer for revocation within thirty days of receiving the cancellation order.
- If a registered person's registration has been cancelled suo moto by the proper officer, an application can be filed for revocation of cancellation in form GST REG-21.
- He has 30 days from the date of serving of the cancellation order at the Common Portal to submit it.
- If the officer is satisfied, he can rescind the cancellation of registration within 30 days of receiving the application by issuing an order in form GST REG-22. Reasons for registration revocation or cancellation must be documented in writing.
- The proper officer can issue an order in GST REG-05 rejecting the revocation application and informing the applicant.
- Before rejecting an application, the proper authority must send the applicant a show-cause notice in GST REG–23, asking them to explain why the application should not be refused. Within seven working days of receiving the notice, the applicant must respond in form GST REG-24.
- The proper officer will decide within 30 days of receiving the applicant's clarification in form GST REG-24.
Note: If the registration has been terminated due to failure to file returns, an application for revocation cannot be filed. Such returns must be filed first, together with payment of all tax, interest, and penalty obligations.