The GST Regime mandates every person/business with an annual turnover of Rs. 40 lakhs* (Rs 10 lakhs for North Eastern states) or more, to register as a normal taxable person. Likewise, a person making inter-state transactions of taxable goods/services is also required to be registered under GST. In a similar manner, if a taxpayer is no more liable to pay tax, he can also chose to cancel his/her GST registration. However, if the GST registration of a taxpayer is cancelled by a proper officer, he can not procure taxable supply of goods and services without revocation. Nevertheless, for a person, who continues to trade taxable good/services without proper GST registration, it shall be treated as an offence under GST and is liable heavy penalties as found appropriate by the authorised officer.

Cancellation of Registration under GST

The GST registration of the taxpayer can be considered for cancellation for the below-given scenarios:

1. Reasons for Cancellation

A taxpayer opts in for cancellation of registration on the grounds of:

• Liability: GST registration is mandatory for every business exceeding the threshold limit. However, if the annual turnover of the business drops below the given threshold limit, the registered person can opt in for GST cancellation.
• Merger: The taxpayer has transferred or merged the business with another organization or vice versa). In this case, the transferee (or the new company from amalgamation/ demerger) has to get registration under GST.
• Dissolution: The taxpayer has discontinued the business.
• Constitution: There is a change in the constitution of the business

For cancellation, the taxpayer will have to submit an E-application in FORM GST REG-29 through the GST Portal. An authorised officer, upon proper enquiry, shall provide cancellation of the registration.

When the registration of a registered person other than an Input Service Distributor or a non-resident taxable person or a person paying tax under the composition scheme or TDS/TCS; has been cancelled, the person has to file a final return within three months of the date of cancellation or date of order of cancellation, whichever is later. It has to be filed electronically in FORM GSTR-10 through the common portal either directly or through a Facilitation Centre notified by the Commissioner.

2. Forms for Cancellation

Every person who was registered under erstwhile indirect tax laws had to mandatorily migrate to GST irrespective of the fact that registration threshold under GST being higher was not met.

For example, registration threshold under VAT in most states was 5 lakhs whereas it is 40 lakhs under GST. Such a taxpayer had to file an application electronically in FORM GST REG- 29 at the GST portal.

Kindly note where such taxpayers have issued tax invoice under GST Regime or does not fall in above criteria, file REG 16 for cancellation of registration
If in case, a registered person is deceased, the family or the legal heir of taxpayer can apply for cancellation of GST registration in  REG 16.

Following details are required in FORM GST REG 16

• Details of inputs, semi-finished, finished goods held in stock on the date on which cancellation of registration is applied;
• Liability thereon;
• Details of the payment.

Proper officer has to issue an order for cancellation in FORM GST REG-19 within 30 days from date of application. The cancellation will be effective from a date determined by the officer and he will notify the taxable person

Note: When the registration of a registered person other than an Input Service Distributor or a non-resident taxable person or a person paying tax under the composition scheme or TDS/TCS; has been cancelled, the person has to file a final return within three months of the date of cancellation or date of order of cancellation, whichever is later. It has to be filed electronically in FORM GSTR-10 through the common portal either directly or through a Facilitation Centre notified by the Commissioner.

3. Cancellation by Legal Heirs

If in case, a registered person is deceased, the family or the legal heir of the taxpayer can apply for cancellation of GST registration in FORM GST REG 16.

The legal heirs are required to provide the following details in FORM GST REG 16

• Details of inputs, semi-finished, finished goods held in stock on the date on which cancellation of registration is applied;
• Liability thereon;
• Details of the payment.

4. Cancellation by Authorised Officer

3. Cancellation by Authorised Officer

An Authorised officer can cancel GST registration of a taxpayer if,

• The registered person does not conduct business from the place as declared during registration.
•  The registered person issues invoices without any supply of Goods and/or Services.
• The registered person violates anti-profiteering provisions
• Utilization 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.
• Avails input tax credit in violation of section 16 of the Act or the rules
• A taxpayer who failed to file GSTR-3B for more than six consecutive months
• Suspension is attracted in case ‘Significant Anomalies’ observed between the values of
  • Outward supplies reported in GSTR3B vs declared in GSTR1
  • ITC Value declared in GSTR 3B vs values available in GSTR 2B

To cancel the registration of a given business, the authorised officer is required to follow the below-given process

• Authorised notifies the concerned person by sending show cause notice in FORM GST REG -17
• For any disagreement, the registered person is required to reply in FORM GST REG -18 within 7 days of issuance of the notice.
• If the authorised officer finds the reply to be satisfactory, he can drop the proceedings and pass an order in FORM GST REG –20.
• However, if the registered person fails to justify, why his/her registration should not be cancelled, the authorised officer will issue an order in FORM GST REG-19.
• The order will be sent within 30 days from the date of reply to the show cause

Revocation of Cancellation under GST

In case of cancellation imposed by an authorised officer, the given taxpayer can apply revocation of cancellation within thirty days from the date of the cancellation order.

Process:

• A registered person submits an application for revocation of cancellation through FORM GST REG-21 on the GST portal.
• If the authorised officer is satisfied with the reason provided by the taxpayer, the registered officer is required to,
  • Record the reasons for revocation of cancellation of registration in writing.
  •  Reverse the cancellation of registration.
  • Pass an order of revocation in FORM GST REG-22.

• However, if the reason submitted by the taxpayer is not found satisfactory to the authorised officer, he can reject the application for revocation. The officer is required to order in FORM GST REG-05 and communicate the same to the applicant.
• Before rejecting, the proper officer must issue a show cause notice in FORM GST REG–23 for the applicant to show why the application should not be rejected. The applicant must reply in FORM GST REG-24 within 7 working days from the date of the service of the notice.

The proper officer is required to take a decision within 30 days from the date of receipt of clarification from the applicant in FORM GST REG-24.

Why Revocation is necessary:

If a taxpayer does not apply for revocation of cancellation, it shall be deemed to be a ‘deficiency’ within the meaning of rule 9 (2) of the Central Goods and Service Tax Rules, 2017 and can be considered as a ground for rejection of the application for fresh registration.

On the other hand, if the taxpayer continues to trade goods and supplies with GST registration, it shall be considered as an offence under GST law and the taxpayer shall be liable to heavy penalties

Re-Registration under GST

As stated before, for any supplier of taxable goods and services, exceeding the given threshold limit, is required to register under GST. However, in recent times, GST officials have come across application of fresh registration of businesses, who have had their registration cancelled by an officer, on account of non-compliance of the statutory provisions.

To avoid such circumstances, CBIC released Vide circular no. 95/14/2019-GST dated March 28th, 2019,wherein the officials have clarified the consequence the taxpayer has to face in case of non-revocation of cancelled registration.

In cases where a registered taxpayer applies for another registration within the same state, the authorised officer is required to analyse whether existing registration continues or is being cancelled;

• In case of cancelled registration, further analysis shall commence on whether the registration is cancelled on account of violation of provisions of section 29 (2) (b) [composition dealer has not furnished returns for 3 consecutive tax period] or section 29 (2) (c) [registered taxpayer has not furnished returns for a continuous period of 6 months];
• If the registration is cancelled, whether the taxpayer has opted/filed application for revocation of cancellation of registration.

Rejection

As per Vide circular no. 95/14/2019-GST dated March 28th, 2019, an authorised officer has been given the power by the CBIC to reject an application of fresh registration, if upon analysis, the applicant is found to have a registration cancelled by an officer, and the applicant has not filed for the revocation of the same.

Note: Application for revocation cannot be filed if the registration has been cancelled because of the failure to file returns. Such returns must be furnished first, along with payment of all dues amounts of tax, interest & penalty.

Extend the time limit for filing an application for revocation of cancellation of registration for specified taxpayers:

S.O. (E). — WHEREAS, sub-section (2) of section 29 of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as the „CGST Act?) provides for cancellation of registration by proper officer in situations described in clause (a) to clause (e) as under: –

1. Registered person has contravened such provisions of the Act or the rules made there under as may be prescribed; or
2. A person paying tax under section 10 has not furnished returns for three consecutive tax periods; or
3. Any registered person, other than a person specified in clause (b), has not furnished returns for a continuous period of six months; or
4. Any person who has taken voluntary registration under sub-section (3) of section 25 has not commenced business within six months from the date of registration; or
5. Registration has been obtained by means of fraud, willful misstatement or suppression of facts

The registered persons whose registration has been cancelled under sub-section (2) of section 29 of the CGST Act are unable to get their cancellation of registration revoked despite having fulfilled all the requirements for revocation of cancellation of registration shall be allowed to file an application for revocation of cancellation of the registration not later than 22.07.2019.

Please refer to Order No. 5/2019 – Central Tax for further details.

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