CANCELLATION OF REGISTRATION UNDER GST

Registration under GST Act

Section 22 of the Central Goods and Services Tax Act, 2017 provides for registration.  Section 22 provides the list of person who is liable to be registered under this Act.  It also provides exemption from registering with GST Authorities.  Every supplier shall be liable to be registered other than special category States, from where he makes a taxable supply of goods or services or both, if his aggregate turnover in a financial year exceeds ₹ 20 lakhs.   In respect of Special category States, this threshold limit is ₹ 10 lakhs.

Section 23 provides the list of persons who are liable for registration.  Section 24 provides the list of persons who are liable to be registered compulsory under the provisions of the Act.  The persons making any inter-State supply are also liable to be registered but later the persons making any inter-State supply by means of service having turnover within ₹ 20 lakhs per annum are exempted from registration with effect from 13^th October, 2017. 

Section 25 provides for voluntary registration.  A person, though not liable to be registered under section 22 or section 24 of the Act, may himself get registered voluntarily and all the provisions of the Act, as are applicable to a registered person and shall apply to such person.

Cancellation of registration

The registration may be cancelled by means of surrender of registration by the registered person or by the proper officer on certain occasion.

Section 29(1) of the Act provides that the Superintendent of Central tax may either-

• on his own motion; or
• on an application filed by the Registered person or by his legal heirs, in case of death of such person

cancel the registration.  He is to consider the following before cancelling such registration-

• the business has been discontinued, transferred fully for any reason including death of the proprietor, amalgamated which other entity, demerged or otherwise disposed of; or
• there is any change in the constitution of the business; or
• the taxable person, other than the person registered under section 25(3) [voluntary registration], is no longer liable to be registered under section 22 or 24.

Section 29(2) of the Act provides that the Superintendent of Central tax may cancel the registration of a person from such date, including any retrospective date, as he may deem fit, where-

• a registered person has contravened the provisions of this Act or the rules made there under as may be prescribed; or
• a person paying tax under composition scheme has not furnished returns for three consecutive tax periods; or
• any registered person, other than a person paying tax under composition scheme has not furnished returns for a continuous period of six months; or
• any person who has taken voluntary registration has not commenced business within six months from the date of registration ; or
• registration has been obtained by fraud, willful misstatement or suppression of facts.

Before cancellation of registration the proper officer is to give reasonable opportunity of being heard to the person concerned. 

Application for cancellation

Rule 20 provides that a registered person, other than a person to whom a registration has been granted under-

• Rule 12 – Grant of registration to persons required to deduct tax at source or to collect tax at source; or
• A person to whom a Unique Identity Number has been granted under Rule 17

seeking cancellation of his registration shall electronically submit an application in Form GST REG  - 16.  In this form the details of inputs held in stock or inputs contained in semi finished or finished goods held in stock on the date from which the cancellation of registration is sought, liability thereon, the details of payment, if any, made against such liability and may furnish along with the application, relevant documents in support thereof, at the common portal within a period of 30 days of the occurrence of the event warranting the cancellation, either directory or through a Facilitation Center notified by the Commissioner.

Rule 21  of Central Goods and Services Tax Rules, 2017 provides that the registration granted to a person is liable to be cancelled if the said person-

• does not conduct any business from the declared place of business; or
• issues invoice or bill without supply of goods or services in violation of the provisions of this Act or the rules made there under; or
• violates the provisions ofsection 171 of the Act (anti-profiteering) or the rules made there under.

Surrender under voluntary registration

The proviso to Rule 20 provides that no application of surrender of registration shall be considered in case of a taxable person, who has registered voluntarily, before the expiry of a period of one year from the effective date of registration.

But now the above said proviso has been omitted vide Notification No. 03/2018-CT, dated 23.01.2018, with effect from 01.01.2018.  Now the registration obtained voluntarily may be cancelled at any time.

Cancellation of registration

Rule 22 provides the procedure for cancellation of registration by the department.

Rule 22(1) provides that where the proper officer has reasons to believe that the registration of a person is liable to be cancelled, 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, as to why his registration shall not be cancelled.  The reply to the show cause notice shall be furnished in Form REG – 18 within the period specified in the notice.

Rule 22(3) provides that where a person who has submitted an application for cancellation of his registration is no longer liable to be registered or his registration is liable to be cancelled, the proper officer  shall issue an order in Form GST REG – 19 within a period of 30 days from the date of application, the date of the reply to the show cause notice issued, cancel the registration with effect from a date to be determined by him and notify the taxable person, directing him to pay arrears of any tax, interest or penalty including the amount liable to be paid.  Rule 22(5) provides that the above said procedure shall be applicable to the legal heirs of a deceased proprietor, as if the application had been submitted by the proprietor himself.

Rule 22(4) provides that where the reply furnished is found to be satisfactory, the proper officer shall drop the proceedings and pass an order in Form GST REG – 20..

Deemed cancellation

The cancellation of registration under the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act, shall be deemed to be a cancellation of registration under this Act.

Consequence of cancellation            

Section 29(3) provides that the cancellation of registration shall not affect the liability of the person to pay the tax and other dues under the Act or to discharge any obligation 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.

Section 29(5) provides that every registered person, whose registration is cancelled shall pay an amount, by way of debit in the electronic cash ledger or electronic cash ledger equivalent to the credit of input tax in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock or capital goods or plant and machinery on the day immediately preceding the date of such cancellation or the output tax payable on such goods, whichever is higher, calculated in such manner as prescribed.

In case of capital goods or plant and machinery, the taxable person shall pay an amount equal to the input tax credit taken on the said capital goods or plant and machinery, reduced by such percentage points as may be prescribed or the tax on the transaction value of such capital goods or plant and machinery under section 15, whichever is higher.

Revocation of cancellation of registration

Rule 23 provides the procedure for revocation of cancellation of registration.  The procedure is as detailed below-

• A registered person, whose registration is cancelled by the proper officer, on his own motion, may submit an application for revocation of cancellation of registration.
• The application shall be in Form GST REG – 21.
• The application shall be submitted to the proper officer within a period of 30 days from the date of service of the order of cancellation of registration at the common portal either directly or through a Facilitation Centre notified by the Commissioner.
• No application for revocation shall be filed, if the registration has been cancelled for the failure of the registered person to furnish his returns, unless such returns are furnished and any amount due as tax along with any interest, penalty and late fee payable.
• If the proper officer is satisfied, for reasons to be recorded in writing, that there are sufficient grounds for revocation of cancellation of registration, he shall revoke the cancellation of registration by an order in Form GST REG – 22 within a period of 30 days from the date of receipt of the application.
• The revocation order is to be communicated to the applicant by the proper officer.
• The proper officer may, for reasons to be recorded in writing, by an order in Form GST REG – 05 reject the application for revocation of cancellation of registration and communicate the same to the applicant.
• Before rejection of the application, the proper officer shall issue a notice in Form GST REG – 23 requiring the applicant to show cause as to why the application submitted for revocation should not be rejected.
• The applicant shall furnish the reply within a period of 7 working days from the date of service of the notice in Form GST REG – 24.
• Upon receipt of the information or clarification from the applicant, the proper officer shall proceed to dispose of the application within a period of 30 days from the date of receipt of such information or clarification from the applicant.