GST Cancellation. Easy guide FY 21-22 & Onwards

Section 29 of the GST Act talks about GST cancellation or suspension of GST registration. Registered person or his legal heirs can file an application of GST cancellation. Proper officer may also cancel GST registration after giving show cause notice to registered person.

Please note GST cancellation will not discharge registered person from any of the liability of tax or any other dues payable by him/her till the effective date of cancellation.

Table of Contents

Voluntary GST Cancellation

Voluntary GST Cancellation can be done by filing online application in Form GST REG-16. The form has 3 parts:

Basic Details – Place of business address is prefilled. Registered person has to update address for future correspondence.
Cancellation Details – Registered person has to specify reasons for cancellation, effective date of GST cancellation, details of closing stock/capital goods as on effective date of GST cancellation and details of tax paid on inputs/capital goods held as on effective date of GST cancellation.
Verification – Done through Electronic Verification Code.

The following are some of the top reasons for voluntary GST registration cancellation:

Business discontinued
Change in constitution of business
No longer liable for GST registration

Cancellation by GST Officer

Proper officer for the reasons mentioned below in the list can proceed for cancellation of GST registration. The officer must give show cause notice in form GST REG-17 before taking any action against registered person.

Proper officer may also cancel GST registration for one or more of the following reasons:

Any contravention of Act or rules done by registered person.
Tax returns not filed for 6 continuous months or if dealer is composite dealer, then tax returns not filed for 3 consecutive tax period
Voluntary registration obtained but no business commenced within 6 months
Registration obtained by means of fraud or willful misstatement.

The officer will specify the reasons for GST cancellation in the form GST REG-17. The registered person will have to appropriately respond within the time limit of notice. If a hearing is scheduled, registered person along with authorized representative, if any to be present on the hearing.

Once the proper officer is satisfied from the registered person responses, he or she will dismiss the case and order will be passed by him/her in form GST REG-20. However, if the proper officer is not satisfied, he will issue order of cancellation of GST registration in form GST REG-19.

Procedure for GST Cancellation

Our experts at TaxLedgerAdvisor provide consultancy for GSTcancellation and can help registered person to initiate the same. Before cancellation application is filed all the monthly/quarterly/annual return overdue must be filed.

Step 1: GST Cancellation can be done by filing online application in Form GST REG-16. Logon to GST Portal >> https://www.gst.gov.in/

The form has 3 parts:

Basic Details – Place of business address is prefilled. Registered person has to update address for future correspondence.
Cancellation Details – Registered person has to specify reasons for cancellation, effective date of GST cancellation, details of closing stock/capital goods as on effective date of GST cancellation and details of tax paid on inputs/capital goods held as on effective date of GST cancellation.
Verification – Done through Electronic Verification Code.

Step 2: Proper officer post review of application, will issue order of cancellation in form GST REG-19 within the period of 30 days from the date of application. Effective date of cancellation will be either the date provided by registered person in above form or the date as determined by proper officer.

Our experts at TaxLedgerAdvisor provide consultancy for GST cancellation and can help registered person to initiate the same. Also, can assist in filing all the monthly/quarterly/annual return overdue must be filed.

The application will be monitored by our experts at TaxLedgerAdvisor and all the question/queries from proper officer will be responded after appropriate discussion with registered person.

Final Return

A final return in form GSTR-10 must be filed post cancellation of GST registration within a period of 3 months from the effective date of cancellation or date of cancellation order, whichever is earlier. This provision is not applicable to Input Service Distributors (ISD), composite dealers & person who are liable to deduct tax at source as per Sec 51 or collect tax at source as per Section 52.

The final return aid department to determine no GST dues are pending from registered person. The person if did not file the same a notice will be issued to him/her for filing the final return within 15 days of the date of issue of such notice.

If no final return filed, proper officer basis the information available with him determine the taxpayer’s liability.

Preparing to Cancel GST Registration

File overdue returns
Payment of all overdue GST liabilities.
Payment of tax on inputs/capital goods held as on effective date of GST cancellation

Rejection of application for GST cancellation

Proper officer for one or more of the reasons below, reject the GST cancellation application:

Incomplete application
In case of merger, transfer or amalgamation, the new entity did not obtain GST registration before applying for GST cancellation.

Proper officer will issue notice in writing and applicant will have to respond within 7 days from the date of receipt of such application. If the applicant does not respond he may reject the cancellation application by giving opportunity of being heard.

Revocation of GST Cancellation

The following are the steps to file for revocation of GST cancellation:

As per Section 30 of the GST Act, a registered person whose cancellation application was approved and cancellation order was passed, he/she may within a period of 30 days apply for revocation of GST cancellation in form GST REG-21.

If officer is satisfied with the reasons for revocation, he/she may revoke GST cancellation after documenting reasons in writing. However, officer may reject the revocation application after issuing show cause notice i.e., giving opportunity of being heard to taxpayer. The taxpayer must revert to such notice within 7 days. The officer within 30 days of receipt of response from assess pass order as he/she may deem fit.