TaxTMI 
TaxTMI 
Cancellation of registration
The registration granted under GST Act can be cancelled for specified reasons. The cancellation can either be initiated by the department on their own motion or the registered person can apply for cancellation of their registration. The registration can be cancelled for any of the following reasons:
- a person registered under any of the existing laws, but who is not liable to be registered under the GST Act;
- the business has been discontinued, transferred fully for any reason including death of the proprietor, amalgamated with other legal entity, demerged or otherwise disposed of;
- there is any change in the constitution of the business;
- the taxable person (other than the person who has voluntarily taken registration under sub-section (3) of section 25 of the CGST Act, 2017) is no longer liable to be registered;
- a registered person has contravened such provisions of the Act or the rules made thereunder;
- a person paying tax under Composition levy has not furnished returns for three consecutive tax periods;
- any registered person, other than a person paying tax under Composition levy has not furnished returns for a continuous period of six months;
- 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;
- registration has been obtained by means of fraud, willful misstatement or suppression of facts.
If the Superintendent of Central Tax has reasons to believe that the registration of a person is liable to be cancelled, 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, as to why his registration shall not be cancelled; will be issued. The reply to the show cause notice issued has to be furnished by the registered person in FORM REG18 within a period of seven working days. If the Authority does not satisfy with the reply submitted by the registered person, he may cancel the registration certificate.
Issue
The issue to be discussed in this article as to whether the registration certificate may be cancelled for the reasons not shown in the show cause notice issued to the registered person with reference to decided case law.
Case law
As already seen the Departmental authority is to issue the show cause notice to the registered person, for the cancellation of registration, with the grounds on which the department is going to cancel the registration of the registered person. The Authority cannot deviate itself from the grounds mentioned in the show cause notice for the cancellation of the registration certificate and citing some other grounds and cancel the registration.
In M/s. JK Technology Versus Deputy State Tax Officer, O/o. Assistant Commissioner (State Taxes), Telangana, and 2 others. - 2026 (7) TMI 713 - TELANGANA HIGH COURT, the Deputy Tax Officer, Charminar issued a show cause notice to the petitioner vide notice dated 08.08.2023. In that show cause notice he informed that he was in the opinion that the registration of the petitioner is liable to be cancelled on the reason that the petitioner has obtained the registration by means of fraud, wilful misstatement or suppression of facts underSection 29(2)(e). The petitioner was directed to give reply to the Department within 7 days from the date of receipt of the notice. The notice also directed to appear before the Authority on 15.083.2024. The show cause notice further indicated that the registration of the petitioner was suspended on 08.08.2023 i.e., the date of show cause notice. It seems that the petitioner did not file any reply to the show cause notice.
On 22.01.2024 the Deputy Tax Officer passed an order on the show cause notice, which is challenged before the High Court. In the said order it was alleged that the Deputy Tax Officer was of the opinion, based on the records available with the Department, that registration of the petitioner is liable to be cancelled on the ground-
- Section 29(2) (c) of the Act – Person, other than paying tax u/s 10, failed to furnish returns for prescribed periods.
- It was alleged that the petitioner failed to furnish returns to the department with effect from 01.01.2023 to till date.
- The order further directed the petitioner to file a final return in FORM GSTR-10 within three months of the date of the order and also to file pending returns.
- The order further indicated that the cancellation of registration shall not affect the liability to pay tax and other dues under this Act or to discharge any obligation under this Act or the rules made thereunder for any period prior to the date of cancellation whether or not such tax and other dues are determined before or after the date of cancellation.
The High Court, after hearing both the parties, inclined to allow the writ petition on the sole ground that it is based upon a ground upon which the petitioner was never put to notice. In the show cause notice the ground shown is that the petitioner obtained registration by means of fraud whereas the order shows that the cancellation is for the reason of non-filing of the returns from the period 01.01.2023 to till date. The High Court quashed the impugned order and the show cause notice and restored the registration to the petitioner. However, the High Court granted a liberty to the Department to issue fresh show cause notice, if any grounds exist for proposed cancellation of GST registration of the petitioner. Needless to .say, that the show cause notice should contain specific grounds with supporting documents so that the petitioner can submit a reply. Based thereupon, the proper officer can take a decision in accordance with law in a time bound manner.