Cancellation of GST registration by Tax Officer

About

Cancellation of GST Registration means the permanent closure of the GSTIN of the taxpayer.

After cancellation the taxpayer will not be a GST registered person any more and hence will not have to pay or collect GST or claim ITC anymore and accordingly, need not file GST returns. .

Cancellation of GSTIN is of two types –

1. Cancellation by the Registered Person’s will

The registration can be cancelled by filing an application on the GST Portal citing the appropriate reason

2. Cancellation by the Proper Officer Suo-moto.

In certain circumstances, the registration is cancelled by the tax officer in cases such as non-filing of returns, fraud, contravention of provisions of GST Act etc.

In this article, we will discuss the cancellation of GST registration by the Tax officer, the reasons, and its process.

Cancellation of GST registration by tax officer

The registration can be cancelled by the Tax Officer under the following circumstances when...

➤ The registered taxable person does not conduct any business from the declared place of business

➤ The registered person has contravened any provisions of the Act or the rules made thereunder.

➤ Taxpayers registered under Composition Scheme has not furnished returns for three consecutive tax periods

➤ 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

➤ Any person who has taken voluntary registration but doesn’t start business within 6 months from the date of registration.

➤ Taxpayer issues invoice or bill without supply of goods/services in violation of the provisions of this Act, or the rules made thereunder

➤ Taxpayer violates the anti-profiteering provisions (for example, not passing on benefit of ITC to customers)

➤ If found that the registration has been obtained by means of fraud, willful misstatement or suppression of facts.

➤ Taxpayer fails to 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)

➤ Taxpayer 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 believe that the registration of a person is liable to be cancelled under section 29, he shall issue a notice to such person in Form GST REG-17, requiring him to show cause, within a period of seven working days from the date of the service of such notice, citing reason on why his registration shall not be cancelled.

The person’s reply to the show cause notice issued shall be furnished in Form GST REG-18 within the period specified therein.( Usually within 7 days from date of service of notice)

1- If the reply is found to be acceptable, the proper officer will drop the proceedings and pass an order in form GST REG–20.

2- If the registration is no longer liable or the person’s registration is liable to be cancelled, the proper officer shall issue an order in Form GST REG-19, within a period of thirty days from the date of application submitted or the date of the reply to the show cause, cancel the registration, with effect from a date to be determined by him and notify the taxable person, directing him to pay tax, or any interest or penalty including the amount liable to be paid under sub-section (5) of section 29.

Forms used while cancellation of GST registration

GST REG 16

When the taxpayer himself applies for the cancellation of registration, the application for cancellation has to be made in form GST REG 16.

GST REG 17

An authorized GST officer can provide the notice of show cause/cancellation to the registered taxpayer and its business entity by using the REG 17 form requiring him to show cause, within a defined time period from the date of the service of such notice, citing reason on why his registration shall not be cancelled.

GST REG 18

The show cause notice can be replied by the means of furnished GST REG 18 form under the specified time period. Taxpayers must reply to the notice within 7 days of issuance of the notice giving the explanation or citing valid reasons of safeguarding the cancellation of registration.

GST REG 19

The GST REG 19 form is used by a GST officer for issuing a formal order for the cancellation of GST registration. The order for sending the notice must be under 30 days from the date of application or the response date in GST REG 18 form.

GST REG 20

The show cause notice when satisfied by the GST officer or the reply is found to be acceptable, the proper officer will drop the proceedings and pass an order in form GST REG–20.