How to initiate drop proceedings for suspended GST registration/GSTIN

The GST Network (GSTN) introduced a new facility in December 2022 for taxpayers to initiate drop proceedings on the GST portal, allowing them to restore their suspended GST registration or GST Identification Number (GSTIN). 

This article covers the details about who is eligible to use the facility, since when the facility is available on the GST portal, the step-by-step process and options available to those who cannot use the facility or have missed the time limits.

When can the GSTIN get suspended?

A taxpayer's GST registration or GSTIN can be suspended when they fail to file their GST returns for six consecutive months as monthly filers and for two consecutive quarters as quarterly filers. 

The proceedings for GST registration cancellation may still be in progress. Still, the tax official can prompt the suspension upon issuing an auto-generated show-cause notice to the taxpayer.

The conditions or criteria for suspension/cancellation are laid down in Section 29(2) of the CGST Act, read with Rules 21(h) and (i) of the CGST Rules and are in force from 1st October 2022. Suspension of GST registration is governed by the proviso to Section 29(2) of the CGST Act read with Rule 21A of the CGST Rules. In this case, GST returns refer to Form GSTR-3B, notified under Section 39(1) of the CGST Act.

For instance, if M/s ABC Ltd, a large manufacturer, fails to file monthly GSTR-3B from May 2022 to October 2022, their GST registration gets temporarily suspended. Similarly, suppose M/s XYZ & associates, a small law firm that had opted into the QRMP scheme, fails to file quarterly GSTR-3B for quarters ending 30th June 2022 and 30th September 2022. In that case, their GST registration will be temporarily suspended.

What happens if the GST registration gets suspended?

If the GST registration gets suspended under Rule 21A(2), during the period when GST registration is suspended, the taxpayer cannot-

• Make taxable supplies of goods and services or issue tax invoices or charge and collect taxes.
• File GSTR-3B of current months/quarters without furnishing pending returns of previous periods.
• Be granted refunds under GST.

When can the suspended GSTIN be restored?

The suspended GSTIN can be restored or revoked when the earlier default is complied with by the taxpayer. Hence, the cancelled or suspended GST registration gets restored or revoked automatically on the GST portal once the taxpayer files their pending GST returns.  

For instance, continuing with the previous illustration, if M/s ABC Ltd files all the returns to date in December 2022, the GST registration earlier suspended shall be restored. Likewise, if M/s XYZ & Associates filed their pending quarterly returns in November 2022, the suspended GSTIN gets revoked.  

However, there are times when the cancelled GST registration needs to be restored. In such cases, the government has allowed taxpayers to restore or revoke the suspension of GST registration or GSTIN. They can opt for automated drop proceedings upon filing their pending GST returns. They need to click on ‘Initiate Drop Proceeding’ as explained below. 

Who is eligible to use the 'Initiate drop proceedings' facility?

Only those businesses whose GST registration has been suspended on or after 1st December 2022 can use the facility for initiating drop proceedings on the suspended GSTINs. Also, their GSTIN must have been suspended due to the non-filing of GSTR-3B for six months/two quarters, as the case may be.

However, it was temporarily unavailable for a brief period in December but was reinstated after that, allowing only a few taxpayers to utilise this facility. Businesses that file their pending monthly or quarterly returns can initiate drop proceedings to revoke the suspension of their GST registration.

Hence, if a GST registration has gotten suspended due to the non-filing of returns before 1st December 2022, this process cannot restore such a suspended GSTIN. 

When and where can one find the 'Initiate drop proceeding' facility?

The facility to ‘Initiate drop proceeding' has been available on the GST portal after login from early December 2022 onwards. However, it was temporarily unavailable for a brief time.

It is available on the following path after the user logs into the GST portal. Go to 'Services'> 'User Services'> 'View Notices and Orders'> 'Initiate Drop Proceeding'.

Step-by-step process to restore a GSTIN or use the 'Initiate drop proceeding' facility.

Usually, businesses find that the suspended GST registration is restored within 15 minutes of filing all pending GSTR-3B returns. 

However, they can initiate drop proceedings if the revocation does not occur automatically. Simply put, if the GSTIN status does not automatically turn 'Active' from 'Suspended', then use the 'Initiate drop proceeding' facility.

The following are the steps for taxpayers to use the 'Initiate drop proceeding' facility, where the suspended GSTIN does not get auto-restored upon filing all the pending returns-

Step 1: The user must log in to the GST portal.

Step 2: The user must go to the 'Services' menu and select the 'User Services' tab. Click on the 'View Notices and Orders' option from the list.

Step 3: Click on the 'Initiate Drop Proceeding' button against the message box, as shown below-

Step 4: The system displays a message for successfully initiating drop proceedings, as shown below-

There is no need to wait for the restoration of GST registration, as the proceedings get auto-dropped.

Options available for those who cannot use the facility

Suppose the GST registration has gotten suspended due to not filing the GSTR-3B before 1st December 2022. In that case, such businesses cannot use the above steps to restore such a suspended GSTIN.

They will have to approach their respective jurisdictional tax officer to get their suspended GST registration revoked, as only tax authorities have the authority to drop the proceedings.

In another instance, if the business has filed all the pending returns but the time limit to reply to the show cause notice for cancelling GST registration has expired, then the taxpayer must reach out to their respective jurisdictional tax officer for further steps.