GST REGISTRATION CANCELLATION-REQUIREMENTS & PROCEDURE | CANCELLATION OF REGISTRATION UNDER GST
GST was one of the most needed tax reforms in India. Prior to the introduction of GST, there existed a multiplicity of taxes with no uniformity among the states. With the advent of GST, numerous central and state-level taxes have been integrated into one. It supports the notion of one nation and one tax. Registration of GST in any tax system is the most primary obligation for the identification of taxpayers safeguarding tax compliance within the economy. The registration enables a person to collect tax from his customers and also to claim any input tax credit of tax paid by him. The digitization of the Indian economy has aided GST by providing an easy and effortless way of payment of taxes with three electronic ledgers, namely E-cash Ledger, E-credit Ledger & E-liability Ledger.
The registered person is obligated to maintain proper accounts and records and keep it at his principal registered place of business. To expedite digitization, there is a provision to preserve accounts and other records in electronic form under GST. The registration under GST law implies securing a unique number from the concerned tax authorities for the function of collecting tax on behalf of the government and to avail Input Tax Credit for the taxes on his inward supplies. Every person so registered is given a 15-digit GSTIN (GST – Identification Number). The registration under GST is based on the persons Permanent Account Number (PAN).
The cancellation of registration allows a person who is either registered under Section 22 or 24 of the Central Goods and Services Act, 2017 to withdraw his/her registration under Section 25 of the same Act. In other words, he is not required to collect any GST, pay any GST, and loses his claim to Input Tax Credit (ITC). The requirement to file any GST return also comes to an end.
The cancellation of registration can be sought in the following cases-
- A person who comes under the scope of an already existing law but is not liable to be registered under the GST law.
- the business has ceased to exist for any reason or has been transferred completely owing to any reason such as the death of the proprietor, combined with other business entity or otherwise discarded of;
- due to any amend in the structure and composition of the business;
- the taxable person (either by virtue of section 22 or 24 of the CGST Act, 2017 except a person voluntary registered) is no longer under the compulsion to be registered;
- a registered person who has breached the provisions of the GST Act or any rules made thereunder;
- a person registered under section 10 of CGST Act, 2017 i.e., Composition levy has failed to furnish returns for three succeeding tax periods;
- any registered person, other than a person registered under Composition levy has failed to furnish returns for a period of six months in continuity;
- a person who opts for voluntary registration section 25 (3) has not started with his business within six months from the date of obtaining registration;
- Registration has been achieved either by way of fraud, wilful misstatement or by suppression of material facts.
- A person commits fraud by availing input tax credit in contravention of section 16 of the Act or the rules made thereunder.
- Has issued invoices even though no corresponding goods were sold or services rendered.
- Has not conducted business from the place declared under the registration form.
WAYS OF CANCELLATION OF GST REGISTRATION
PROCEDURE FOR CANCELLATION
I) In case a person seeks to cancel his registration on his own accord, then the following steps must be followed-
- The form GST REG 16 has to be submitted to the proper officer for making an application for cancellation of GST registration.
- The requisite details must be filled in form GST REG 16 such liability, details of payments and of inputs and outputs (quantity of finished, semi-finished)
- In form GST REG-19, the proper officer will issue an order for cancellation within a period of 30 days from the date of application. The cancellation shall be effective from a date as per the order given by the officer, and the same will be notified to the taxable person.
II) If a proper officer feels that the taxpayer has contravened any provisions of the GST Act or any rules made thereunder, he may cancel the registration of such concerned taxpayer in the following manner-
- The proper officer shall send a show-cause notice to a person whom he feels has breached any law in form GST REG-17.
- The person receiving show cause notice ought to reply in form REG–18 within 7 days from the date of service of notice, giving sufficient reasons as to why his registration shall not be cancelled.
- If the reply filed is found to be satisfactory, the proceedings shall be withdrawn, and the order in form GST REG–20 shall be passed by the proper officer.
- On the contrary, if the reply is not found to be satisfactory, the proper officer shall issue an order in form GST REG-19. Such an order of final cancellation shall be sent within 30 days from the date of reply to the show cause.
REVOCATION OF CANCELLATION OF GST REGISTRATION
Revocation in simple terms means invalidation of a promise by an official authority. Under the GST law, revocation of cancellation of GST registration implies a reversal of cancellation order, i.e., the registration is still legitimate and in effect. Revocation cannot be applied when the taxpayer voluntarily applies for cancellation, it only works when the cancellation order of registration has been passed by the proper officer on his own motion. A request can be submitted by the taxpayer within thirty days of the date of the cancellation order. One can follow the steps as mentioned below in order to apply for revocation –
- A form GST REG-21 must be furnished by the taxpayer only if his registration has been annulled Suo moto by the proper officer.
- The submission must be made within 30 days from the date of receipt of the cancellation order.
- Only on receiving a satisfactory reason can a proper officer can revoke the cancellation of registration. The order is passed in the form GST REG-22 within 30 days from the date of receipt of the application with satisfactory reason.
- On the contrary, if the reason is not found to be satisfactory, the proper officer shall issue an order in form GST REG-05 for rejection of the application for revocation by an order and notify the same to applicant.
- The proper officer shall, before rejecting the application will issue a show-cause notice in form GST REG–23 invite any reasons as to show why the application should not be rejected. The reply must come within seven working days in form GST REG-24 from the date of the receipt of the notice.
- The proper officer will take a decision within a period of 30 days from the date of receipt of the reply received from the applicant.
The GST registration holds significant value under the domain of GST. It helps to analyze and determine the set of persons who are liable to pay tax. It helps in the creation of a database of all the entities who are covered under the umbrella of GST, also the GST registration is a prerequisite after the enforcement of the Act of 2017 for any person who wants to carry business within the country. It means that if such registration is cancelled, a person will be ceased to carry any business activities. Where the person is covered under section 24 of the CSGT Act, 2017, which makes it compulsory to register, and if such person’s registration is cancelled, however, he continues to carry on his business operations, it will be deemed to be an offense and shall attract heavy penalties under GST.
The GST registration can be withdrawn for a variety of reasons. It can be either commenced by the tax department Suo Moto or the registered person can apply for cancellation of their registration. A person may opt for cancellation of his GST registration if his business has ceased to exist for any reason or has been transferred completely due to any reason such as the death of the proprietor, combined with other business entity or otherwise discarded off. The cancellation by any means requires the person to file a final return under form GSTR 10. It shall be filed within three months of the date of cancellation or date of cancellation order, whichever is later. In the end, Registration of GST in any democratic country is the most basic obligation for the identification of taxpayers for ensuring and safeguarding tax compliance within the economy.