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FAQs

GST Cancellation

1. How can a registered person apply for cancellation of GST registration?

A registered person (other than those having unique identification number under rule 12 or under rule 17) can apply for cancellation of GST registration under section 29(1) by filing Form GST REG-16 electronically through the GST portal. The application must contain details of inventory (input, semi-finished and finished goods), capital goods, liabilities and payment details relating to cancellations. This application must be submitted directly or through a facilitation center notified by the commissioner within 30 days of the event requiring cancellation.

GST registration can be canceled if a registered person:

  • Does not work from stated business location.
  • Issuing invoices without actual delivery of goods or services, violating GST laws.
  • Violates anti-profiteering provisions under section 171.
  • Failure to comply with Rule 10A (relating to bank account details).
  • Fraudulently used Input Tax Credit (ITC) in violation of section 16.
  • Declare outgoing supplies (GSTR-1) in excess of the actual supplies reported in the valid return (GSTR-3B).
  • Violates rule 86B, which prohibits the use of electronic credit book for tax payments in certain cases.
  • Violates the provisions of rule 23(1) (third or fourth proviso).
  • Failure to file monthly return (GSTR-3B) for six consecutive months (for monthly filers).
  • Failure to submit a quarterly report for two consecutive tax periods (for quarterly filers).

If any of these conditions are met, the GST authorities may take action to cancel the registration.

GST registration can be suspended in the following circumstances:

  • Upon application for cancellation – If a registrant applies for cancellation, the registration is deemed to be suspended from the later of the application date or the requested cancellation date until the final cancellation process is completed.
  • Suspension by the tax authorities – If the officer considers that the registration can be canceled due to violation under section 29 or rule 21, he can suspend it until it is cancelled.
  • Significant Tax Discrepancies – If a mismatch is detected between GSTR-1 (outgoing supplies) and GSTR-3B (returns), or between taxpayer’s purchase and supplier’s sales data, a mismatch is indicated.
  • Failure to comply with Rule 10A – If a taxpayer fails to update his bank account details as required.

Consequences of suspension:

  • Taxpayers cannot make taxable supplies or issue tax invoices.
  • No GST return (GSTR-3B) is required during the suspension.
  • Refund claims in accordance with section 54 are not permitted if the registration has been suspended.

Revocation of Suspension:

  • The suspension is canceled once the revocation process is complete.
  • If suspended due to pending returns, the suspension is canceled after all pending returns have been filed.
  • If suspended for breach of Rule 10A, the suspension will be canceled upon compliance with Rule 10A.
  • If deemed necessary, the official may revoke the suspension at any time before it is lifted.

In case of recall, specific GST compliance procedures should be followed for supplies made during the suspension period.

GST registration can be canceled by the tax authorities if they feel that it can be canceled under section 29. The process is as follows:

Show Cause Notice (SCN) Issuance:

  • The proper officer issues a notice in Form GST REG-17, asking the taxpayer to explain within 7 working days why their registration should not be cancelled.

Taxpayer’s response:

  • The taxpayer must submit the answer to form GST REG-18 within the prescribed deadline.

Cancellation order:

  • If the taxpayer has applied for cancellation (under rule 20) or if the officer is of the opinion that the registration should be cancelled, the officer issues an order in Form GST REG-19 within 30 days, specifying the date of cancellation.
  • The taxpayer must pay any outstanding tax, interest or penalties.

Proceedings Dropped (if applicable):

  • If the taxpayer explains his case satisfactorily or submits all pending returns with full tax payment including interest and late charges, the officer closes the proceedings by issuing an order in Form GST REG-20.

Application for legal heirs:

  • In the event of the owner’s death, the legal heirs can apply for cancellation, and the same rules apply as if the owner had applied.

A taxpayer whose GST registration has been canceled by the tax authority (on its own initiative) can apply for cancellation by following these steps:

Application for revocation:

  • Submit an application in Form GST REG-21 on the GST Common Portal within 90 days from the date of the cancellation order.
  • This period may be extended up to 180 days by the Commissioner or authorized officer.
  • If the cancellation is due to failure to file returns, the taxpayer must first file all pending returns and pay all fees including tax, interest, penalties and late fees.

Filing Pending Returns (if applicable) (if applicable):

  • After cancellation, all overdue returns must be sent within 30 days from the date of cancellation to the date of cancellation.
  • If the cancellation was retroactive, all returns must be submitted within 30 days from the effective cancellation date to the revocation date.

Approval or Rejection of Revocation:

  • If the officer is satisfied with the application, they approve the cancellation in form GST REG-22 within 30 days of receiving the request.
  • If the officer is not satisfied, they issue a Show Cause Notice (SCN) in form GST REG-23, asking the taxpayer to explain why the cancellation request should not be rejected.
  • The taxpayer must respond to form GST REG-24 within 7 working days.
  • The official must make a decision on the application within 30 days of receiving the response.
  • If rejected, an order is issued in form GST REG-05.
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