GST registration cancellation is when a business entity is removed from the Goods and Services Tax (GST) system. Businesses making more than a certain amount yearly need GST registration.
When GST registration is cancelled, it means the person is not a registered GST individual anymore. They don’t have to pay or collect GST. One can cancel GST registration if GST laws don’t apply on them, if the business or job is being closed down or if a tax officer orders GST registration cancellation.
Voluntary GST Registration Cancellation
In the process of voluntarily cancelling GST registration, individuals or entities holding GST registration have the option to terminate their registration. This procedure requires the submission of a cancellation request to the GST Department, utilising the designated Form GST REG-16. Subsequent to a review of the application, the GST Officer, upon being content with the provided information, will issue an official order for the cessation of GST registration. This order is conveyed through Form GST REG-19.
Reasons for Voluntary GST Registration Cancellation
Several compelling reasons may prompt individuals or entities to opt for voluntary GST registration cancellation. These reasons include:
- Discontinuance or Business Closure: In cases where a business ceases its operations or undergoes complete closure, the owner may decide to cancel their GST registration.
- Business Transfer and Structural Changes: Instances of business transfer, amalgamation, merger, de-merger, lease or any other relevant structural alterations can necessitate GST registration cancellation.
- Constitutional Change of Business: When a change in the business’s constitution leads to a modification in the associated PAN (Permanent Account Number), it becomes a valid reason for voluntary GST registration cancellation.
- Turnover Below Threshold: If the turnover of the business falls below the stipulated threshold limit required for GST registration, the owner may choose to cancel their GST registration.
- Sole Proprietorship Succession: In the event of the demise of the sole proprietor, the cancellation of GST registration becomes a viable course of action.
Opting for the voluntary cancellation of GST registration can offer distinct advantages to business owners. By undertaking this step, individuals can avoid the cumbersome responsibilities of monthly GST return filing and the associated penalties or late-filing fees.
GST Registration Cancellation by GST Officer
Registration cancellation under the GST framework can also be initiated by a GST Officer when valid reasons exist for such action. This process is initiated by the issuance of a show-cause notice in Form GST REG-17.
When is GST Registration Cancellation done by a GST Officer?
A GST Officer has the authority to initiate the cancellation procedure if any of the following events occur:
- Continuous GST Return Non-Filing: When a taxpayer consistently fails to file GST returns as required by law.
- Non-Commencement of Business: An entity registered voluntarily for GST but fails to commence its business activities within a six-month period.
- Violation of GST Act or Rules: If a registered taxpayer breaches one or more provisions of the GST Act or its associated Rules.
- Obtaining Registration Through Deception: If a GST registration is obtained through fraudulent means or deliberate misrepresentation.
Improper Tax Practices: Instances where a taxpayer engages in activities like supplying goods or services without proper invoices or generating invoices without actual supply, with the intent to evade taxes or wrongfully claim input tax credit.
GST Registration Cancellation Process by GST Officer
In cases of GST registration cancellation initiated by a GST Officer, the concerned taxpayer is duly notified before the cancellation takes effect. This notification is conveyed through Form GST REG-17, outlining the specific grounds for the proposed cancellation. The taxpayer is granted a fair opportunity to present their case and be heard prior to the cancellation of their GST registration.
The notice issued by the GST Officer provides comprehensive details on why the GST registration is at risk of cancellation. It also outlines the procedures for the taxpayer to provide their response and offers the possibility of scheduling a hearing, if required.
Upon receiving the taxpayer’s response, if the authorised authority deems the response satisfactory, the case may be dismissed. This could result in the issuance of an order in Form GST REG-20, indicating the continuation of the GST registration.
However, if the response does not meet the authority’s satisfaction, an order in Form GST REG-19 is issued, formalising the cancellation of the GST registration. This concludes the process of GST cancellation initiated by a GST Officer.
Forms for GST Registration Cancellation
In the context of cancellation, specific forms play an important role in formalising the process. The forms involved in this procedure are:
1. Application for Cancellation – FORM GST REG 16
Taxpayers who are unable to adhere to the criteria stipulated for GST registration must initiate the cancellation process using FORM GST REG 16. This form is applicable not only to taxpayers themselves but also to the legal heirs of deceased taxpayers who find themselves in a similar situation. The form requires the following essential information:
- Particulars of inputs, semi-finished and finished goods held in stock on the date of applying for GST Cancellation.
- Liability associated with the aforementioned goods.
- Details regarding the payment made.
2. Cancellation Order – FORM GST REG-19
After the cancellation application is submitted, it is then the responsibility of the tax officer to review the application and make a decision, within a span of 30 days and this order is officially communicated through FORM GST REG-19.
3. Proposed Cancellation by GST Officer – FORM GST REG-17
This form lays down the specific grounds for the proposed cancellation by the GST officer.
Please note: The effectiveness of the GST cancellation is based on the determination made by the tax officer. The officer designates a specific date from which the cancellation becomes operational. Furthermore, the taxable individual is duly informed about this decision by the officer.
Process of GST Registration Cancellation
The procedure of cancellation is as follows:
Step 1: Submission of GST Registration Cancellation Application
Using Form GST REG-16, submit the GST cancellation application through the common GST portal. The application should include:
- Contact details: mobile number and email address.
- Reason for cancellation.
- Desired cancellation date.
- Particulars of tax payable on stock of inputs, inputs available in semi-finished goods, inputs available in finished goods, stock of capital goods/plant and machinery.
- Details of the latest filed GST return by the taxpayer, along with the ARN of that return.
Step 2: Review and Cancellation Order
- The GST Officer reviews the application.
- Within 30 days from the application’s date, the officer issues a cancellation order in Form GST REG-19.
- The cancellation becomes effective from a date determined by the officer.
- The taxable individual is notified of the cancellation’s effective date.
Consequences of GST Registration Cancellation
It carries significant implications that taxpayers need to be aware of. The consequences of cancellation are:
- Termination of GST Liability: Once the GST registration is cancelled, the taxpayer is relieved from the obligation to remit Goods and Services Tax (GST) payments.
- Business Continuation and Compliance: For certain types of businesses, GST registration is a mandatory requirement. If a business still continues to operate without valid GST registration, it is considered to be a contravention of GST regulations and may result in penalties.
Revocation of GST Registration Cancellation
The concept of revocation of cancellation involves the reversal of an official decision or action pertaining to the cancellation of a registration. It signifies that the initial decision to cancel the registration has been annulled and therefore the GST registration becomes valid again.
Applicability of Revocation of Cancellation
The possibility of revoking the cancellation of registration is relevant only when the tax officer has independently cancelled the registration of a taxable entity. In such cases, the taxable individual holds the right to apply (within 30 days from cancellation order) to the tax officer for the revocation of cancellation.
Process of Revocation of GST Registration Cancellation
The process of revocation of GST registration cancellation is as follows:
1. Initiation:
- Registered individuals submit Form GST REG-21 for revocation of cancellation.
- Applicable when the officer has cancelled the registration suo moto.
2. Timeline:
- Application filed within 30 days from receiving cancellation order.
- Submission via Common Portal.
3. Assessment:
- Proper officer evaluates the application.
- If satisfied, the officer revokes cancellation using Form GST REG-22.
- Reasons for revocation are recorded in writing.
4. Rejection Authority:
- Proper officer can reject a revocation application.
- Rejection conveyed through Form GST REG-05 to applicant.
5. Show-Cause Notice:
- Before rejection, proper officer issues Form GST REG–23.
- Applicant responds via Form GST REG-24 within seven working days.
6. Evaluation and Decision:
- Proper officer reviews the applicant’s response.
- Decision on revocation made within 30 days from receiving response.
- Decision recorded in Form GST REG-24.
Final Thoughts
Understanding the process of GST registration cancellation is important for businesses. Choosing to cancel it voluntarily can save businesses from the trouble of monthly filings and penalties. Also, tax officers can cancel it if the concerned business doesn’t follow the rules under GST laws and regulations.
Following these rules helps businesses to follow the law, avoid problems and work well with GST. By understanding these details, businesses can run smoothly while following the GST rules, which helps them grow and stay stable in the long run.
