Cancellation of registration under GST

You can cancel your GST registration if the GST rules don’t apply to your business or you are shutting it down, or the tax officer calls for cancellation. This article will guide you through the different types of cancellations, and the overall process.

Latest Updates on Cancellation of GST Registration

26th October 2023
CGST notification no: 52/2023
Format of form REG-08- Order of Cancellation of Registration as TDS or TCS is modified.

4th August 2023
CGST notification no: 38/2023
The time limit for taxpayers to apply for the revocation of a cancelled GST registration is now 90 days from the date of the service of the order of cancellation of registration instead of 30 days with effect from 1st October 2023.

31st March 2023
CGST notification no: 03/2023
The department extended the time limit to apply for revocation of GST registrations cancelled on or before 31st December 2022 upto 30th June 2023. The reasons for cancellation should be due to the non-filing of tax returns. Also, only the taxpayers who couldn't apply for revocation within 30 days of the cancellation order can file it.

Click here for more details.

18th February 2023
49th GST Council meeting updates-
The Council recommend an amnesty scheme to help taxpayers whose GST registration has been cancelled due to the non-filing of GST returns. Under this amnesty scheme, the department would allow the taxpayers to file for the revocation of GST registration which couldn’t file the same earlier.

1st February 2022
Budget 2022 updates-
Section 29 of the CGST Act is amended for cancellation of GSTIN by officer:
1. 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, his registration can get cancelled. 
2. For any other regular taxpayer, registration will be cancelled if there is the default for consecutive tax periods as prescribed against earlier the six months consecutive default in return filing.

 

Meaning of cancellation of GST registration

Cancellation of GST registration simply means that the taxpayer will not be a GST registered person anymore. He will not have to pay or collect GST or claim the input tax credit and accordingly, need not file GST returns.

Consequences of GST registration cancellation

• The taxpayer will not pay GST anymore
• 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 the GST registration?

The below infographic guides you on who can call for the cancellation of GST registration-

*** Application for cancellation, in case of voluntary registrations made under GST, earlier could have been made only after one year from the date of registration. This provision stands rescinded. 

Cancellation of GSTIN for Migrated Taxpayers

Every person who was registered under erstwhile indirect tax laws had to mandatorily migrate to GST. Many such persons may have not been liable to be registered under GST. For example, the threshold under VAT in most states was Rs.5 lakhs and Service Tax was Rs.10 lakh, whereas it is Rs.20 lakh* under GST. However, they had to make sure you are not making inter-state supplies since registration is mandatory for inter-state suppliers except for 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 had to submit an application electronically in the form GST REG-29 at the GST portal. 

The proper officer shall, after conducting an enquiry as required would cancel the registration. 

Below are the steps for cancelling GSTIN by the migrated taxpayers on the GST Portal- 
Step 1- Log in to the GST Portal and click the Cancellation of Provisional Registration

Step 2-

• The Cancellation page opens.
• Your GSTIN and name of business will show automatically.
• You are required to give a reason for cancellation.

You will be asked if you have issued any tax invoices during the month.

Simply fill up the details of authorized signatories and their place. Finally, sign off with EVC if you are a proprietor or a partnership firm. LLPs & Companies must mandatorily sign with DSC. 
Note: Taxpayers who have not issued tax invoices can avail above service. If the taxpayer has issued any tax invoice then FORM GST REG-16 needs to be filed. Refer below.

Cancellation by taxpayer (Other than Migrated)

Why does a taxpayer wish to cancel his registration?

• The business has been discontinued
• The business has been transferred fully, amalgamated, demerged or otherwise disposed of —The transferee (or the new company from amalgamation/ demerger) has to get registered. The transferor will cancel its registration if it ceases to exist.
• There is a change in the constitution of the business   
• From 1st January 2022, CBIC made the aadhaar authentication mandatory to apply for revocation of cancelled GST registration under the CGST Rule 23 in REG-21.

(For example- A private limited company has changed to a public limited company)

Forms for cancellation

All those who cannot follow the above method must file 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 the form GST REG-19 within 30 days from the date of application. The cancellation will be effective from a date determined by the officer and he will notify the taxable person

Cancellation by tax officer

Why will the officer cancel registration?

The registration can be cancelled if the taxpayer-

(a) Does not conduct any business from the declared place of business OR 

(b) Issues invoice or bill without supply of goods/services (i.e., in violation of the provisions) OR 

(c) Violates the anti-profiteering provisions (for example, not passing on the benefit of ITC to customers) OR

With effect from 1st January 2021-

(d) Utilisation of ITC from electronic credit ledger to discharge more than 99% of the tax liability for specified taxpayers violating Rule 86B – with the total taxable value of supplies exceeding Rs.50 lakh in the month, with some exceptions. OR

(e) A taxpayer who cannot file GSTR-1 due to GSTR-3B not being filed for more than two consecutive months (one quarter for those who opt into the QRMP scheme) OR 

(f) Avails input tax credit in violation of the provisions of section 16 of the Act or the rules.

Procedure

• If the proper officer has reasons to cancel the registration of a person then he will send a show-cause notice to such person in form GST REG-17.
• The person must reply in form REG–18 within 7 days from the date of service of notice why his registration should not be cancelled.
• If the reply is found to be satisfactory, the proper officer will drop the proceedings and pass an order in the form GST REG–20.
• If the registration is liable to be cancelled, the proper officer will issue an order in the form GST REG-19. The order will be sent within 30 days from the date of reply to the show cause.

Revocation of cancellation of registration

What is revocation of cancellation?

Revocation means the official cancellation of a decision or promise. Revocation of cancellation of registration means that the decision to cancel the registration has been reversed and the registration is still valid.

When is revocation of cancellation 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.

Procedure

• A registered person can submit an application for revocation of cancellation, in form GST REG-21, if his registration has been cancelled suo moto by the proper officer.
• He must submit it within 30 days from the date of service of the cancellation order at the Common Portal.
• If the proper officer is satisfied he can revoke the cancellation of registration by an order in form GST REG-22 within 30 days from the date of receipt of the application. Reasons for revocation of cancellation of registration must be recorded in writing.
• The proper officer can reject the application for revocation by an order in form GST REG-05 and communicate the same to the applicant.
• Before rejecting, the proper officer must issue a show-cause notice in form GST REG–23 for the applicant to show why the application should not be rejected. The applicant must reply in form GST REG-24 within 7 working days from the date of the service of notice.
• The proper officer will take a decision within 30 days from the date of receipt of clarification from the applicant in form GST REG-24.

Note: Application for revocation cannot be filed if the registration has been cancelled because of the failure to file returns. Such returns must be furnished first along with payment of all dues amounts of tax, interest & penalty.   

Clear GST Software is a user-friendly easy-to-use software to help you in easy, timely, error-free filing of GST returns. To know more about GST registration and other information, please refer to our various articles. To know more about transition to GST, please read our extensive articles on GST.

Can the business register for GST after cancellation?

Yes, there is no restriction to taking GST registration once it has been cancelled except where it was cancelled by the tax officer.

For more information, read a host of articles by ClearTax:

• GST Registration Cancellation Online
• Procedure for cancellation of GST registration by tax officer
• All you need to know about the revocation of GST registration cancelled
• Cases of Suspension of GST registration and to-dos
• Filing of GSTR-10 Final return under GST

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