Cancellation of GST Registration

If you are a businessman or a trader who carries a spread out business, then it is mandatory to register for GST and get a GSTIN (GST Identification Number). Any registered company in India must possess a GSTIN and should file the GST responsibly. However, there are times businesses need to cancel the GST for one or more goods.

This article charts out the details of the cancellation of the GST registration. A detailed step-by-step process will assist you in carrying out the cancellation of your GST.

In this article, we see:

What is the meaning of the Cancellation of GST?
Who Can Cancel the GST Registration?
How to Cancel GST Registration?
Reasons for Cancellation
Final Returns
What are the Effects or Consequences of GST Cancelation?
Revocation of GST Cancellation- Meaning and Procedure
Important Updates and Notes on GST Cancellation

So, let’s dive in.

What is the Meaning of the Cancellation of GST?

The meaning of the cancellation of GST registration implies that the registered taxpayer will no longer be registered and will not have to pay GST any longer. He will not have to collect or pay GST, or even claim any input tax credit or file GST returns.

Who Can Cancel the GST Registration?

GST registration can be canceled in any of the three cases listed below:

Requested by Taxpayer
Ordered by the tax officer
Migrated Taxpayers (registered with the earlier tax systems)
Request made by the legal heirs in case of death of the taxpayer

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How to Cancel GST Registration?

In this section, we shall learn about the cancellation of GSTIN or the GST registration in different scenarios.

Cancellation in case of Migrated Taxpayers

Since the implementation of GST on July 1, 2017, the taxpayers who were registered with the earlier tax systems had to mandatorily migrate to the GST system. There were many taxpayers who were not liable to get themselves registered under GST. However, they had to ensure that they did not conduct interstate supplies as the registration was compulsorily required for an interstate supply, barring the service providers.

For cancellation, this category of taxpayers has to electronically submit an application through Form GST REG-29 on the GST website. After a thorough evaluation of the application, the office can approve the cancellation of such migrated taxpayers.

Process of GST Cancellation for Migrated Taxpayers

Step 1: Log in to the GST portal.

Step 2: Click the Cancellation of Provisional Registration.

Step 3: Once the Cancellation Page opens, it displays your GSTIN and Business name. Provide the reason for cancellation on this page.

You will be asked if you have issued tax invoices in that month.

Step 4: Fill in the details of your authorized signatories, including their place of residence. If your business is a sole proprietorship or partnership, sign off with EVC. Signing up with DSC is required by law for LLPs and corporations.

It is possible to complete this process if the taxpayer has not issued a tax invoice. In the case of a taxpayer issuing a tax invoice, form GST REG-16 needs to be filed.

Process of GST Cancellation for Taxpayers Other Than Migrated Taxpayers

For cancellation of your GSTIN, make an application through the Form GST REG 16.

Include these details in the application in the form:

Information about finished or semi-finished goods in stock on the date of cancellation.
Inform about any liabilities.
Information about the payment.

From the date of application for cancellation, the tax officer will issue an order within 30 days. The officer shall determine the date of cancellation and will intimate the taxpayer accordingly.

Process of Cancellation Initiated by the Tax Officer

Officer shares Form GST REG-17: Form GST REG-17 will be sent to the taxpayer if the officer sees reasons to cancel the registration.

Reply to Form GST REG-17: Form REG-18 must be returned in 7 days from the date of service of notice in order to explain why the registration should not be canceled.

GST REG-20 for Dropping cancellation: An order is passed in Form GST REG-20 if the officer finds the reply satisfactory and declines to proceed.

GST REG-19 for Carrying out Cancellation: GST REG-19 is issued when the proper officer issues an order to cancel the registration. Within 30 days of the show cause response, the order will be sent.

Reasons for Cancellation

There could be various reasons to cancel the GST registration. We shall see some of the reasons in this section. The GST cancellation can be done if:

If a person is not liable to be registered under GST Act because the individual is already registered under existing law; in such a case, the GST registration needs to be canceled.
The GST can be canceled if the business gets discontinued for some reason or is transferred entirely due to the death of the sole proprietor or business owner, or the merger with other businesses.
If the constitution of the business changes, the GST cancellation needs to be done.
If a person who is taxable is not liable to be registered any longer.
If an infringement of the existing GST laws has occurred.
If the registered person/business under Composition Levy has not filed the GST returns for a continuous period of 3 months.
If a registered person, other than the one paying tax under Composition Levy, has not filed returns for six consecutive months.
If a person who takes voluntary registration under Section 25 (subsection 3), and has not commenced business till six months, may cancel the registration.
Finally, the GST registration can be canceled if the registration was done fraudulently or by suppressing the facts.

Final Returns

In case of cancellation or surrender of GST registration, a final filing of GSTR-10 is required. This filing includes the details of all the stock that was held by the person/taxpayer immediately after the date of cancellation.

GSTR-10 is a final return that has to be done one single time and it must be filed within 3 months from the date of cancellation or the order of the date of cancellation. Whichever happens earlier.

What are the Effects of GST Cancellation?

Following are the consequences or effects of cancelation of GST:

The taxpayer will not have to file GST returns and pay tax (GST) any longer.
Certain businesses require a GST mandatorily. If such companies continue to conduct business despite canceling the GST registration, it would be considered as an offense under GST and will call for action and penalties from the authorities.

Revocation of GST Cancellation

In certain cases, the revocation of the registration of GST is required. We will learn about the concept and related aspects in this section.

What is Revocation of GST Cancellation?

Revocation of GST cancellation means revoking or reversing the process of cancellation of GST. It implies that the GST registration is still valid.

When is Revocation applied?

Revocation is only in the case where a tax officer has canceled the GST registration of a taxable registered person. Now, this taxpayer can send an application to the office for revoking the cancellation. The taxable person can accomplish this within 30 days from the date the cancellation was ordered.

Procedure for Revocation

Here’s the procedure for revocation of the cancellation of the GST registration:

Through the Form GST REG-21, the taxpayer can submit an application to revoke cancellation. This is applicable when the tax officer has canceled the registration suo moto.
This application must be sent within 30 days from the order of cancellation date on the GST portal.
The revocation takes place if the officer is satisfied with the application and can revoke it by an order in the form GST REG-22 within 30 days of receiving the application. The reasons for the revocation have to be submitted in writing.
Also, the revocation of cancellation can be rejected by the officer through Form Reg-05, which will be intimidated to the applicant.
Before passing the order for rejection, the officer will issue a show-cause notice in the Form GST REG-23. This form will require the applicant to provide reasons why the revocation should not be rejected. A reply Form called GST REG-24 must be shared by the applicant within 7 days from the date of the show-cause notice.
Once the officer receives the clarification in the form GST REG-24 from the applicant, a decision will be taken within 30 days of receiving this form.

NOTE: A revocation application cannot be filed if the registration was canceled owing to failure in filing returns.

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Important Updates and Notes on GST Cancellation

29th August 2021

A taxpayer can revoke a canceled GST registration up until 30 September 2021 if the last date falls between 1 March 2020 and 31 August 2021. CGST notification number 34/2021 dated 29th August 2021 applies to GST registrations that are canceled under Section 29(2) clauses (b) or (c) of the CGST Act.

28th May 2021

If you need to file a revocation application after 15th April 2021 and before 29th June 2021, you have until 30th June 2021.

22nd December 2020

1. The tax officer has the authority to cancel GST registration in the following cases, under CGST Rule 21:

a. Receives input tax credit in violation of the provisions of section 16 of the Act or the regulations

b. Cancellation of almost 99% of tax liability with ITC from electronic credit ledger for specified taxpayers - if the total taxable value of supplies in the month exceeds Rs.50 lakh with exceptions.

c. Non-filing of GSTR-1 due to non-filing of GSTR-3B for more than two consecutive months (quarter for taxpayers enrolled in QRMP).

2. The suspension of your GST registration may be triggered by a major inconsistency between your GST-3B and GST-1 and GST-2B under CGST Rule 21A.

14th March 2020

A taxpayer canceling their GST registration by the 14th of March 2020 can file an application for the revocation of cancellation at the 39th GST Council meeting. There is a deadline of 30th June 2020 to submit the application. Those who wish to continue the business can take advantage of the extension.

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Key Takeaways

Based on observations in this article, here are the important notes we can take down:

The cancellation of GST registration implies that the registered taxpayer will no longer be registered and will not have to pay GST any longer.
Taxpayers, Tax officers, migrated taxpayers, and legal heirs are the people who can initiate a cancellation of GST.
There could be numerous reasons for canceling the GSTIN, such as a change of business or a business is discontinued.
Cancellation for migrated taxpayers has to be done by logging in to the GST portal. Other taxpayers have to file an application through the form GST REG-16 to initiate cancellation. A Tax officer can initiate cancellation by issuing the form GST REG-17.
GSTR-10 is a final return that has to be done one single time and it must be filed within 3 months from the date of cancellation or the order of the date of cancellation.
The taxpayer will not have to file GST returns and pay tax (GST) after the cancellation of his GSTIN.
Revocation of GST cancellation means revoking or reversing the process of cancellation of GST.
Through the Form GST REG-21, the taxpayer can submit an application to revoke cancellation.
A revocation application cannot be filed if the registration was canceled owing to failure in filing returns.