GST Cancellation
GST registration may be voluntarily cancelled in cases where the business is inactive or lacks the required turnover. Additionally, a GST officer has the authority to cancel a GST registration if the business is not compliant with GST regulations. Upon cancellation of GST registration, the individual or entity is relieved from the obligation to file GST returns and is no longer responsible for the payment or collection of GST.
Voluntary GST Cancellation
If a person or entity with GST registration wishes to cancel their GST registration, a cancellation request must be submitted to the GST Department in Form GST REG-16. After reviewing the application, if the GST Officer is satisfied, he or she will issue an order to terminate GST registration in Form GST REG-19.
The following are some of the top reasons for voluntary GST registration cancellation:
- Discontinuance or closure of a business.
- Transfer of business, amalgamation, merger, de-merger, lease, or other pertinent reasons.
- Change in the constitution of business which results in a change of PAN.
- Turnover reduces below the threshold limit of GST registration.
- Death of the sole proprietor.
Voluntarily cancelling a GST registration can save the business owner from unnecessary hassles of filing GST returns each month and payment of penalty or late-filing fee.
Cancellation by GST Officer
An officer can initiate the cancellation of a GST registration under GST if the Officer has justification to cancel the GST registration. The proceedings for GST Cancellation by Officer will begin by issuing a show-cause notice in Form GST REG-17.
A GST officer can start the cancellation process if any of the following events occur.
- If a taxpayer has failed to file GST returns continuously.
- An assessee registered for GST voluntarily but did not start a business within six months.
- The registered taxpayer has broken one or more sections of the GST Act or its Rules.
- The GST registration is obtained through deception or malicious misrepresentation.
- To dodge tax or improperly claim the input tax credit, a taxpayer supplies goods or services without an invoice or produces an invoice without a provision of goods or services.
In case of cancellation by the GST Officer, the Officer would notify the taxpayer whose GST registration is liable to be terminated before cancellation. The taxpayer would then be given a reasonable opportunity to be heard before their GST registration is cancelled.
The notice to the taxpayer from GST Officer would be sent in Form GST REG-17 with specific reasons why the GST registration should be cancelled. The notice would also allow the taxpayer to respond to the notice and have a date and time if a hearing is scheduled.
If the taxpayer responds to the notice and the proper authority is satisfied with the response, he or she may dismiss the case and issue an order in Form GST REG-20. If he is not satisfied, he may issue a Form GST REG-19 order cancelling the GST registration.
Revocation of GST Cancellation
Revocation of GST cancellation means that the cancellation decision has been overturned, and the registration remains valid. This only applies when a tax officer cancels a taxable person's registration on his initiative. A taxpayer can apply within thirty days of receiving the cancellation order for revocation of the order. The following are the steps to file for revocation of GST cancellation:
If a registered person's registration has been cancelled suo-moto by the proper Officer, an application for revocation of cancellation in form GST REG-21 can be filed within 30 days of cancellation order.
If the GST Officer is satisfied, he or she 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.
Further, the Officer can also issue an order in form GST REG-05 rejecting the revocation application and informing the applicant. However, before rejecting an application, the Officer 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.
Benefits of Voluntary GST Cancellation
If no business activity occurs after acquiring GST registration, the taxpayer must begin the GST cancellation process as outlined. If a taxpayer stops filing GST returns and allows his GST registration to lapse, he will be unable to apply for fresh GST registration using the same PAN.
Further, if the government cancels a GST registration, the taxable person must first apply for the cancellation to be revoked by paying any late fees. Following the restoration, appropriately cancel the GST or continue filing GST returns.
As a result, once a GST registration is received, the taxpayer must keep track of compliance. Hence, if there is no commercial activity, apply for GST registration cancellation as soon as possible.