Reasons for Cancellation of GST Registration and Procedure for Revocation of Cancellation

INTRODUCTION

Many registrations were cancelled due to failure in non-filing of GST Returns in 2020. For registrations cancelled till 12.06.2020, there was another opportunity given to fill for revocation of cancellation of registration till 30.09.2020. CBIC clarified the same under its order No.01/2020 dated 25.06.2020 which would exercise the provision under Section 172 of CGST Act.
It was taken into action as it was important for all taxpayers to file nil returns otherwise penalties were to incur. The person once given the sanction of cancellation order by an officer, will not be liable to collect any GST but will be liable to pay Tax and other inputs up to the date of cancellation.
A remedy is provided to Taxpayers under Section 30 to apply for revocation within 30 days from the date of cancellation. Incase if the taxpayer fails to perform the above duty he has to pay late fees on pending returns upto the date of Cancellation. In the year 2020 many Taxpayers could not file for revocation of cancellation within the 30 days, thus giving zero effects to the provision given under Sub-Section (1) of Section 30 of the Act. 
The GST council on their 40th meeting decided to give another opportunity to revoke cancellation registration to taxpayers who failed to file their revocation application. 
The order has been passed as the Central Goods and Services Tax (Removal of Difficulties) Order, 2020. It was clarified that the period of 30 days for filing application for revocation of cancellation of Registration under Sub-Section (1) of Section 30 of the Act. Registered persons who were served notice under clause (b) or clause (c) of Sub- Section (2) of Section 29 in manner prescribed under clause (c) or clause (d) of Sub-Section (1) of Section 169. 
For cancellation orders passed up to 12th June 2020, the dates of service of the cancellation order should be considered upto 31.08.2020. 
It is on the discretion of the officer to either revoke cancellation of registration or reject any application for the same. The Officer shall not reject any application of revocation of cancellation of registration without giving any prior show cause notice or any opportunity of being heard. 
The Government has also announced the discharge of the late fee under Section 47 for any person failing to furnish the returns in GSTR-3B from July 2017 to Jan 2020. The return is, therefore, necessary to be filed from 01.07.2020 to 30.09.2020.

Notice
GST authorities make communication via GST notices. Notices are sent to the taxpayers to remind them of their defaults if any under the GST laws. Notices can also be sent to collect more information from a taxpayer. GST authorities on verifying GST Returns or information of any sort of hindrance from other government departments or third parties can send a notice.
Show Cause Notice is also a form of Notice. Notices can be served on the basics of action required from a particular taxpayer. 
Common grounds for notices being served- 
    • Non- registration under GST laws;
    • Non-filing of GST Returns;
    • Delay in the filing of GST Returns;
    • Non-Payment of GST;
    • Excess Input Tax Credit claims;
In case of such notice, a taxpayer is required to reply to such notice within the fixed time limit without making any delay. Failure on replying to such notice can cause for legal actions and will allow the authorities to proceed for prosecution or charges for the penalty.

Non- Compliance with GST Return- Show Cause Notice served
Section 73 of CGST Act deals with issuing of Show Cause notice to assesses for-
An authorized officer is required to serve a Show Cause Notice to the taxpayer. The due amount is then required to be paid along with interest and penalty. Under Section 74 of the CGST Act, the Superintendent of Central Tax can issue show-cause notices.
The Central Board of Excise and Customs via Circular No. 3/3/2017-GST stated that all the officers up to the rank of Additional or Joint Commissioner of Central Tax are assigned as the authorized officer for issuing a Show Cause Notice and orders under Sub-Sections (1), (2), (3), (5), (6), (7), (9) and (10) of Sections 73 and 74 of the CGST Act.  The officers are also assigned powers under the Integrated Goods and Services Tax Act, 2017 (IGST Act) as well as per Section 3 read with Section 20 of the said Act. For distribution of work relating to the issuance of Show Cause Notices and orders under Section 73 and 74 of the CGST Act and also under the IGST Act, monetary limit for different levels of officers as also been prescribed. 
The Central Tax Officer of Audit Commissionerate and Directorate General of Goods and Service Tax Intelligence (DGGSTI) shall exercise the powers only to issue Show Cause Notices. GSTR-3A is the notice sent for not filing GST Returns issued under GST laws. The notice GSTR-3A can be issued electronically to the registered email of the registered person who fails to file a return under Section 39 or 42 or 45 or 52. GST department is authorized to file the notice under GSTR-3A for the failure of returns for a continuous period of time. GSTR-3A notice, the taxpayer is given an opportunity to file the returns due with a penalty and other GST compliances. It is mandatory to file such GST return and should be filed as soon as such notice is received. On completion of filing GST returns the registered person can file for GST cancellation for reasons deemed fit under Section 29. On complying with the GST compliances within 15 days, the GST Registration will remain active. In case of failure to reply such notice, the GST Registration can be cancelled.

Steps for responding to a Show Cause Notice [SCN]

Step I- Show Cause Notice is received on registered email consisting of SCN reference number needed to log in GST Registration.
Step II- GST Login via GST Official website. Before the Login, it is required to select New Registration option from Services. Next, we are required to fill details of our Temporary Reference Number.
Step III- After clicking proceed we will receive an OTP on our registered email id.
Step IV- We need to submit the OTP after receiving it.
Step V- Select Application for Filing Registrations from the Service option.
Step VI- A window will appear and we are required to fill in our details.
Step VII- Click on No to the modification in Registration.
Step VIII- Some queries will appear on the screen. After filling those queries and required information we need to click on the Save option.

Notices issued regarding GST Registration
    • REG-03 – During the verification of the application for the GST Registration, a notice can be sent by the authority for receiving clarification for verification of the information sent to them via the application or documents. The same Form for the notice is applicable for amendment of GST Registration. The reply to such notice should be made via Form REG-04. On failure to respond to such notice, the registration stands cancelled and the same is informed to the applicant via electronic mode Form REG-05.
    • REG-17 – It is a form of Show Cause Notice sent by the authority as to why GST Registration shall not be cancelled and the notice reply should consist of such reasons. Reply to REG-17 should be made via Form REG-18 with reasons for non-cancellation of GST Registration. Cancellation of GST Registration can be made via Form REG-19.
    • REG-23 – Show Cause Notice as to why GST Registration must be revoked. The reasons should be well laid down in the notice. Reply to the letter should be made within 7 days from receiving such notice via REG-24. On failing to respond to such notice, cancellation of GST Registration will be revoked.
    • REG-27 – For not making application after obtaining provisional registration or not giving correct or complete details a notice can be issued in REG-26 within the prescribed time limit. Reply can be made via REG-26 and have to appear before the tax authority stating reasonable cause as to why they should be heard. In failure to submit a proper response to such notice, the provisional registration can be cancelled via REG-28.

Modes of Sending GST Notice

Modes of sending GST Notice and communicating the same are prescribed under Section 169 of the CGST Act. 
The modes are as follows-
    • Either delivery by courier or hand-delivery can be done to the taxpayer or his registered representative.
    • With acknowledgement the notice can be sent by speed post or courier to the registered address of the business of the taxpayer.
    • It can be sent via a communication to the formal email address.
    • Notices can be made available on the GST Portal after logging in with the portal.
    • Notices can be also published in regional newspapers of the local address of the taxpayer.
    • In case if the above modes are not availed then by affixing in some prominent place at the last known address of the business or residence can be done. If the same method is found not reasonable by the authorities they can affix a copy on the notice board of their offices of the responsible authority as a last resort.
A taxpayer is granted a relief to not communicate to any notice sent not using the above modes as notified by the GST law from time to time.

Reply to Such Notices

In response to GST Notices received via GST Portal, a taxpayer can use his digital signature or e-signature. In case of any due payment of tax and interest is required, such liability is required to be paid via the requisite form and in an official manner. Reply letterform must be submitted after the payment before the Tax authority that has sent the Notice.
A taxpayer will be subjected to penalty in case of failure in replying to such notices within the time limit. The penalties will be charged and further proceedings will take place as permitted by the GST law.
A taxpayer can legally authorize a representative or chartered accountant to look into the matters of GST as well Notices received related to it. The above can be done by sending Letter of Authorization under GST.  The authorization will give power to his representatives to reply on behalf of him.

Procedure for Cancellation of GST Registration

There are types of procedures- 
    1. By the Request of the Taxpayer- Where the business has either discontinued or transferred and there has been a change in the constitution of the business. It is essential to have a turnover of Rs. 20 to Rs. 40 lakhs at least.
    2. By the Authorised Officer – Any composition dealer failing to furnish their returns for three consecutive terms. Other the composition dealer, any registered person failing to furnish a return for six months terms. Or for any other cases permitted under Section 29(2) of CGST Act, 2017.
    3. By any legal heirs of the dead taxpayer.
    4. Any person other than the registered person is no longer liable to be registered under Section 22 or Section 24.

Cancellation of Registration of GST

    • Section 29(1) of CGST Act, 2017 laid down rules and documents essential to cancel GST Registration. An application for such cancellation is required to be made at a common portal between the limit of 30 days of the occurrence of the event warranting the cancellation.
    • Section 29(2) of CGST Act, 2017 stated for the provisions for the cancellation of registration by the authorized officer. The officer may deem fit any date for such cancellations only when-
    • A registered person liable to pay tax contravening any provisions under the Act;
    • Any composition dealer under Section 10 failing to furnish returns for three consecutive terms;
    • Any person other than the composition dealer failing to furnish a return for 6 months;
    • Any voluntarily registered person failing to commence business within 6 months from the date of registration.
    • Any registration is done by fraud, misrepresentation or suppression of documents;
    • Rule 21 prescribes for registration to be cancelled only for specified cases. The specified cases are as follows-
    • Failing to conduct business at the declared place of business.
    • Failure to supply goods or services but issued invoices or bills for the same violates the provision of the Act.
    • Any rule violating the provisions under Section 171 of the Act.
    • Any registered person failing to furnish the details of his bank accounts within the time period of 45 days from the date of registration being granted or any date mentioned under Section 39. The earliest date will apply.
    • Rule 22 prescribes rules required for cancellation of registration by an authorized officer. On findings specific reasons, the officer may cancel registration by issuing a notice in FORM GST REG-17. The notice will serve as a show cause as to why his registration shall not be cancelled. It is required to go a reply to such notice within 7 days from receiving the notice via FORM GST REG-18. The officer may drop the cancellation on finding a satisfactory answer through the reply of such notice. He may pass the order via FORM GST REG-20. The officer can also drop the proceedings on finding that the registered person instead of filing a reply to the show-cause notice has gone ahead and filled his returns and made payment of all the dues in tax with applicable interest and late fee. The same can be done by the officer via FORM GST REG-20. On finding all grounds to cancel the registration the officer shall issue an order via FORM GST REG-19 within 30 days from the date of reply to Show Cause Notice and thus cancelling the registration.
    • Section 29(3) of CGST Act shall cause any person to pay tax and other dues. There will be no discharge of liability of the person to pay tax and other dues under this Act cause of cancellation of GST registration. 

Revocation of Cancellation of Registration 

It is a decision taken to reverse the cancellation of registration. The revocation is required to be filed on the right time. The revocation may be applied via form GST REG 21 where such order for cancellation of registration has been passed by an authorized officer. The form is required to be filled from 30 days from when the cancellation has been asked. All the defaults should be answered in the form and no error should be made during the application. All the pending returns are required to be filed and all due paid for the revocation to take place. The authorized officer on being assured and satisfied may issue a Form GST REG 22 paving revocation of cancellation of GST Registration.

Application for Revocation of Cancellation
Any registered person whose registration stands cancelled by the authorized officer may apply to the same officer for revocation of cancellation of the registration via FORM GST REG-21. The FORM should be sent at the common portal within 30 days of receiving the cancellation order. 
Under Rule 23(1), if a registration has been cancelled due to non-filling of returns than the application of registration can only be filed after furnishing the returns and payments due with the charge of late fee.
Under Rule 23(1), the returns for the period from the date of order of cancellation of registration till the date of order of revocation of cancellation of registration shall be furnished within 30 days from such order passed.

Acceptance or Rejection of the Application

Acceptance or rejection of the application is made under Section 30(2) of CGST Act, 2017. The authorized officer may by order either accept the application of revocation or reject it. The application for revocation of cancellation shall be rejected unless the applicant has been given a chance to be heard.
Under Rule 23(2) (a), on being satisfied on valid grounds the officer may state his reasons and revoke the cancellation of registration by order via FORM GST REG-22 within 30 days from the date of receiving the application of revocation from the applicant.
Under Rule 23(2) (b), the officer may under his power reject the application for revocation of cancellation of registration by order via FORM GST REG-05 and state the reasons of rejection to the applicant.
Under Rule 23(3), the officer before passing an order of rejection of revocation application may via FORM GST REG-23 send a show-cause notice to the applicant asking him as to why his application should not be rejected and the applicant can send a reply to the same within seven days from the date of the service of the notice vis FORM GST REG-24.
Under Rule 23(4), after receiving clarification via FORM GST REG-24 the officer shall dispose the application by either accepting the application for revocation of cancellation or rejecting the same application within 30 days from the receipt of such information from the applicant.

Relief Granted by the Government to Revocation of Cancellation of Registration

By notification No. 35/2020, dated 03.04.2020, issued under the purview of Section 168A of CGST Act, 2017, any time limit for any compliances falling from 20.03.2020 to 29.06.2020 is extended up to 30.06.2020.
Application for revocation is required to be filed within 30 days from the order of such cancellation; therefore if such period of 30 days is expiring between 20.03.2020 to 29.06.2020, the application can be filled with an extension up to 30.06.2020.

Extension in Period for seeking Revocation
GST Council after their 40th meeting on 12.06.2020 has provided for one-time extension in asking for the revocation of cancellation of registration. It is an opportunity given to the taxpayers to file an application for revocation of cancellation of registration up to 30.09.2020. but only for cases where registrations have been cancelled till 12.06.2020.

Person restricted from applying for Revocation 
    • UIN holders- UN Bodies, Embassies and other notified persons;
    • GST Practitioner;
    • GST Registration cancelled on request by the taxpayer himself/herself;
    • GST Registration cancelled by a legal heir of the deceased taxpayer;

Procedure for Revocation (in brief)
Online procedure-
    • Login gst.gov.in with username and password;
    • Switch to registration than to application bar for revocation;
    • Fill up with an appropriate reason for revocation of cancellation of registration.
    • Choose file button for submitting essential supporting documents;
    • Click the verification box;
    • Select an authorized signatory from the drop-down list and enter a place in the field box;
    • Select SUBMIT WITH DSC OR SUBMIT WITH EVC;

CONCLUSION

GST has both pros and cons while dealing with it. This above blog focuses on notices, show-cause notices issued, GST registration and its revocation. GST registration helps the government and its authorities to classify tax evaders and prevent any person to go without paying the tax. Tax is the duty of people and right of the government. 
GST Council in its 40th Meeting held on 12.06.2020 provided for extension in period for seeking revocation of cancellation of registration.
If someone gets a Show Cause Notice there is nothing to worry. Once such Show Cause Notice is received the Taxpayer can follow above procedures or take help of an expert to represent or tackle the situation on behalf of him. With the rules set out vibrantly, it’s very important for us to abide by it. 
With the online portal modes, it has become easy and convenient to file for GST Registration, make notices and reply to Show Cause Notices in time. It is expected out of the authorized authority to receive such replies of notices and revert on time. It is on the authorities to accept or deny such replies. Most importantly it’s the responsibility of the authority to make the applicant aware of their actions via Notices or via official notifications.
Thus, making it easier for any layman to cooperate with the Government and its tax structure.