Suo Moto Cancellation of GST Registration

Suo moto cancellation of GST registration means cancellation of registration under GST laws by a tax officer on his own motion. However, the provisions of Section 29(2) of the CGST Act mandate that the officer provides his reasons for initiating such suo moto cancellation of registration.

Conditions to be Satisfied for Suo Moto Cancellation of GST Registration

Suo moto cancellation by the tax officer can be initiated if any one of the following conditions is satisfied:

1. The taxpayer has violated the provisions of the CGST Act or the rules made thereunder. 
2. The taxpayer has registered their business through fraud, suppression or misrepresentation of facts.
3. The taxpayer has taken voluntary registration under the GST law and not commenced business within six months from the date of registration. 
4. The taxpayer has failed to apply for GST enrolment within 90 days from the appointed date or any such extended date as may be prescribed.
5. The taxpayer does not conduct any business from the declared place of business.
6. The taxpayer has failed to file returns for six months consecutively, or for two quarters in the case of quarterly filers. The criteria for filing returns is three months in the case of a composition taxpayer.
7. The taxpayer has indulged in supplying goods or services without the issue of an invoice in violation of the provisions of the CGST Act to evade taxes. 
8. It is observed that the taxpayer has issued an invoice without a supply of goods or services, thereby again violating the provisions of the Act to evade input tax credit or get a refund of tax.
9. Failure to deposit taxes collected with the treasury within 90 days.
10. Failure on the taxpayer’s part to pay taxes, interest or penalty to the government within 90 days.
11. Display of misconduct during any proceedings under the GST Act.
12. It is observed that a person is not liable or has ceased to become liable for deduction or collection of taxes under GST laws.
13. The taxpayer is no longer required to be registered under provisions of GST Law.
14. If the business constitution is a sole proprietorship, upon the death of the sole proprietor.
15. In the event of amalgamation, transfer, merger, demerger and the like of a business.
16. If there is a change in the constitution that leads to a change in PAN.
17. In the event of discontinuation of closure of business.
18. In the event the taxpayer violates the provisions of Section 171 of the CGST Act or the rules made thereunder i.e. violate the anti-profiteering measures in place.
19. In the event the taxpayer violates the provision of Rule 10A of the CGST Rules i.e. if the taxpayer furnishes incorrect or false bank account details.
20. In the event the taxpayer avails input tax credit in violation of the provisions of Section 16 of the CGST Act or the rules made thereunder.
21. In the event the taxpayer furnishes details of outward supplies in their GSTR-1 which is higher than the details of outward supplies reported in their GSTR-3B.
22. If the taxpayer violates the provision of Rule 86B of the CGST Rules i.e. restriction of input tax credit utilisation from the electronic credit ledger
23. If the taxpayer violates the provisions of the third or fourth proviso to Rule 23 (1) of the CGST Rules i.e. the rules in regard to revocation of cancellation of GST registration.

Procedure to be Adhered to for Suo Moto Cancellation of GST Registration

• GST law mandates that the tax officer serves show-cause notice to the taxpayer, providing him with an opportunity of being heard. The taxpayer, in response to the show-cause notice, needs to explain why the registration should not be cancelled. The taxpayer is bound to respond to this notice within seven working days.
• To reply to a show cause notice related to suo moto cancellation, a taxpayer can navigate to Services > Registration> Application for Filing Clarifications.
• Basis the response received, the tax officer can choose to either drop the cancellation proceedings initiated if he is satisfied with the response provided, and the same would be intimated to the taxpayer by SMS or e-mail.
• If no response is received from the taxpayer within seven working days or the tax officer is not satisfied with the response received from the taxpayer, he can go ahead and cancel the GST registration.

How to Reply to a Show Cause Notice for Suo Moto Cancellation of GST Registration?

To reply to a show cause notice related to suo moto cancellation of GST registration, navigate to Services > Registration > Application for Filing Clarifications. The application will be displayed for filing a clarification. The reason for cancellation provided by the tax officer will be displayed in the form. A taxpayer may enter their response as applicable. 

The taxpayer is required to submit their response to each of the cancellation reasons invoked by the tax officer in the notice.

How to Activate Cancelled Suo Moto GST Registration?

Step 1: Login to the GST portal at www.gst.gov.in

Step 2: Go to ‘services’ on the dashboard, and select ‘Registration’ > ‘Application for Revocation of Canceled Registration’.

Step 3: Enter the required information and reasons for revocation and attach the relevant documents.

Step 4: Click on the verification checkbox and select the authorised signatory. 

Step 5: Click on ‘Submit with DSC’ or ‘Submit with EVC’ as applicable, and proceed to file the application.

A message will be received that the application is successfully submitted.

If the GST officer is satisfied with the justifications filed, they will withdraw the cancellation order. This will be done within 30 days of receiving the application for revocation. The officer is required to signs an order in Form GST REG-22, revoking the GST registration cancellation. Once this is done, the assessee is considered an active assessee and all accesses available to active taxpayers will be enabled instantly on the GST portal. Further, the taxpayer’s profile and the registration certificate will also be updated.

Effect of Suo Moto GST Registration Cancellation

• Once a GST registration is cancelled by the tax authorities, the taxpayer will be intimated about the same via SMS and Email. 
• An order for cancellation of registration will be issued and intimated to the primary authorised signatory by email and SMS.
• The order will also be made available on the taxpayer’s dashboard to view, print and download.
• The status of the GSTIN/UIN/GSTP ID from ‘Proceeding for Cancellation initiated’ to ‘Inactive’ and will be intimated to the other concerned tax authorities.
• The taxpayer will not be allowed to file returns or upload invoices for the period after the date of cancellation mentioned in the cancellation order. In the case of a GSTP, they will not be able to carry out any GSTP functions for any taxpayer for the period after the date of cancellation mentioned in the cancellation order.
• The taxpayer will also not be able to amend their registration details after the issuance of cancellation order, except for updating their email address and mobile number until the dues/ refund are cleared. 
• The facility to file an application for revocation (if applicable) will be available for such cancelled GST registration.