Suo moto cancellation of GST Registration

[Sudhir Kumar]

What are the procedure for suo moto cancellation. In which conditions suo moto cancellation adopted.

[Rajagopalan Ranganathan]

Sir,

According to Section 29 of CGST Act, 2017,

The proper officer 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, in such manner and within such period as may be prescribed, having regard to the circumstances where,––

(a) the business has been discontinued, transferred fully for any reason including death of the proprietor, amalgamated with other legal entity, de-merged or otherwise disposed of; or

(b) there is any change in the constitution of the business; or

(c) the taxable person is no longer liable to be registered under section 22 or section 24 or intends to opt out of the registration voluntarily made under sub-section (3) of section 25:

Provided that during pendency of the proceedings relating to cancellation of registration filed by the registered person, the registration may be suspended for such period and in such manner as may be prescribed.

(2) The proper officer may cancel the registration of a person from such date, including any retrospective date, as he may deem fit, where,––

(a) a registered person has contravened such provisions of the Act or the rules made thereunder as may be prescribed; or

(b) a person paying tax under section 10 has not furnished returns for three consecutive tax periods; or

(c) any registered person, other than a person specified in clause (b), has not furnished returns for a continuous period of six months; or

(d) 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

(e) registration has been obtained by means of fraud, wilful misstatement or suppression of facts:

Provided that the proper officer shall not cancel the registration without giving the person an opportunity of being heard.

3[Provided further that during pendency of the proceedings relating to cancellation of registration, the proper officer may suspend the registration for such period and in such manner as may be prescribed.

(3) The cancellation of registration under this section shall not affect the liability of the person 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.

In this connection you have to adhere to Standard Operating Procedure (SOP) for implementation of the provision of suspension of registrations under sub-rule (2A) of rule 21A of CGST Rules, 2017 elaborated in Circular No. 145/01/2021-GST dated 11.02.2021

AI Summary

Suo moto cancellation of GST registration: grounds, suspension during proceedings and continuing liability for prior tax obligations. Section 29 authorises the proper officer to cancel GST registration suo moto or on application where business discontinuation, transfer, change in constitution, loss of liability or voluntary opt out occurs; and to cancel (including retrospectively) for prescribed contraventions, prolonged non filing of returns, failure to commence business after voluntary registration, or registration obtained by fraud, misstatement or suppression. The officer must afford an opportunity of being heard and may suspend registration during proceedings as prescribed; cancellation does not relieve prior period tax or other obligations. Suspension procedures follow the SOP in Circular No. 145/01/2021 GST.