Since the taxation policies changed in 2017 and introduced the Goods and Services Tax, business owners in India have had to undergo numerous changes in maintaining their books. One of the major hassles each business owner faced was getting themselves registered under GST.
GST registration opened doors to numerous benefits for business owners. However, it also had complications of getting cancelled or suspended. Most people do not know that even in such extreme cases, a GST registration can be reinstated. Therefore, this article will cover the cancellation and revocation of GST in detail.
Understanding Cancellation of GST Registration
Cancellation of Goods and Services Tax registration is a crucial aspect for businesses, and it can occur voluntarily or through the intervention of a GST officer. The decision to cancel GST registration is often influenced by factors such as business dormancy, insufficient turnover, or non-compliance with GST regulations.
What are the Possible Reasons for the Cancellation of GST Registration?
Cancellation of Goods and Services Tax registration can be voluntarily initiated by the taxpayer or enforced by a GST officer. Understanding the reasons for such cancellations is crucial for businesses to navigate the GST framework effectively.
1. Voluntary GST Cancellation
Businesses or individuals with GST registration can opt for voluntary cancellation for various reasons. To initiate this process, they must submit a cancellation request in Form GST REG-16 to the GST Department. If the GST Officer is satisfied upon review, an order to terminate the GST registration is issued in Form GST REG-19. Some common reasons for voluntary GST cancellation include:
- Permanent closure of business.
- Business transfer, amalgamation, merger, demerger, lease, or other structural changes.
- Change in the constitution of the business resulting in a change of PAN.
- If the turnover is less than the GST registration threshold.
- Death of the Sole Proprietor.
Also Read: After 90 Days, Can I Repeal My GST Enrollment?
2. Cancellation by GST Officer
GST officers can initiate cancellation proceedings if they have justification to do so. This process begins with the issuance of a show-cause notice in Form GST REG-17. Some events that may trigger cancellation by the GST officer include:
- Continuous Failure to File GST Returns.
- Taxpayers who voluntarily registered for GST but did not commence business within six months.
- Breaking one or more sections of the GST Act or its rules.
- If GST registration is obtained through deception or malicious misrepresentation.
- Providing products or services without an invoice or incorrectly claiming input tax credit to avoid paying taxes.
In case of cancellation initiated by the GST officer, the taxpayer is provided with a notice in Form GST REG-17 outlining specific reasons for potential cancellation. The taxpayer has the opportunity to respond, and if the response is satisfactory, the case may be dismissed.
However, if unsatisfied, the GST officer may issue an order in Form GST REG-19, cancelling the GST registration. Comprehending these factors is critical for businesses to handle GST compliance proactively and minimise possible complications.
Who Can File for GST Registration Cancellation?
The following Indian individuals or entities have the authority to initiate the cancellation of Goods and Services Tax (GST) registration:
- Current taxpayers with an active registration.
- Taxpayers who have migrated and received approval for their enrolment application.
- Migrated taxpayers who, despite completing the enrolment application, have not submitted any additional forms.
- Individuals or entities with a unique identification number or those registered as tax deductors/collectors.
What is the Process for Canceling GST registration?
Filing for GST registration cancellation can be tough for those doing it for the first time. Therefore, here is a brief explanation of the GST registration cancellation process:
1. Application for Cancellation
The taxpayer needs to apply for cancellation of GST registration using the appropriate form on the GST portal. The form should be filled with accurate details, and supporting documents may be required based on the reason for cancellation.
2. Voluntary or Mandatory Cancellation
- Voluntary Cancellation: A taxpayer can voluntarily apply for cancellation if they meet the criteria and no longer wish to be registered under GST.
- Mandatory Cancellation: In certain cases, tax authorities may cancel a registration if they find it necessary, for example, if the taxpayer is not conducting business or if there are violations of GST regulations.
3. Verification by Authorities
The tax authorities may scrutinise the application and may seek additional information or clarification. They have the authority to accept or reject the cancellation application based on their findings.
4. Cancellation Order
Once satisfied with the application and verification process, the tax authorities issue a cancellation order. The effective date of cancellation is mentioned in this order.
5. Return Filing
The taxpayer must file all pending GST returns up to the cancellation date. This includes filing of final returns and payment of any outstanding taxes.
6. Handover of Unused Input Tax Credit (ITC)
The taxpayer needs to reverse any unused Input Tax Credit on their closing stock and clear any ITC liabilities.
7. Public Notice
In certain cases, tax authorities may issue a public notice regarding the cancellation, allowing for any objections from concerned parties.
What is the Information Required for Cancellation of GST Registration?
To initiate the cancellation of your GST registration, you are required to provide the following information:
- GSTIN of your business
- Information about the closing stock when discontinuing business operations. Any credit associated with items in stock should be settled along with the return.
- Disclose all information regarding pending taxes and penalties to the tax authorities during the GST registration cancellation process. Settlement of these outstanding amounts is necessary along with the return.
What are the Forms Needed for Cancellation of GST Registration?
Specific forms need to be used to facilitate the cancellation of Goods and Services Tax registration. It also depends on whether the taxpayer initiates the cancellation or is enforced by the GST officer. The appropriate forms streamline the process and ensure compliance with regulatory requirements.
| Cancellation Initiated By | Form Required | Purpose |
| Taxpayer (Voluntary) | GST REG-16 | Application for Cancellation of Registration |
| Tax Officer | GST REG-19 | Registration Cancellation Order |
| Taxpayer (Revoking cancelled GST registration) | GST REG-21 | Application for Revocation of Cancellation of Registration |
What are the Documents Required for Cancellation of GST Registration?
The following documents must be provided to initiate the cancellation of GST registration:
- PAN Card of the business owner
- Aadhar Card of the business owner
- Details of the last return filed
- Information regarding the company authority, including instances of merger, demerger, or transfer
- Payment details for the tax associated with the existing stock.
What is the Impact of Cancellation of GST Registration on Business?
The cancellation of Goods and Services Tax registration can have significant implications for a business. Some key points highlighting the impact of GST registration cancellation are:
1. Relief From GST Compliance Requirements
Upon cancellation, businesses are relieved from the obligation to file regular GST returns. This provides a sense of relief for the business owner from the administrative and documentation responsibilities associated with GST compliance.
2. No Collection or Payment of GST
With the cancellation of GST registration, the business is no longer required to collect GST on its sales or remit GST payments on its purchases. This simplifies the financial transactions and pricing structure for the business.
3. Settlement of Outstanding Dues
Businesses must settle any outstanding dues, including pending taxes and penalties, at the time of GST registration cancellation. Clearing these financial obligations is crucial to ensure a smooth exit from the GST framework.
4. Changes in Accounting and Inventory Management
Businesses need to adjust their accounting systems and inventory management processes to reflect the change in GST status. This includes updating software, revising pricing structures, and ensuring accurate financial reporting.
Understanding Revocation of GST Registration
Revocation of GST registration refers to the process by which a previously cancelled or suspended GST registration is reinstated. Businesses or individuals that have undergone GST registration cancellation, either voluntarily or by enforcement, may seek revocation under specific circumstances.
Also Read: How to Check the GST Registration Revocation Status?
What are the Possible Reasons for the Revocation of GST Registration?
The cancelled GST registration can be reinstated but requires certain specific reasons. Here are some possible reasons for the revocation of GST registration:
- If a business rectifies the issues that led to the cancellation of its GST registration.
- A change in circumstances, such as a revival of business operations after a temporary closure.
- When a taxpayer settles any outstanding taxes, penalties, or other dues associated with the cancelled GST registration.
- If the cancellation was due to misrepresentation or incorrect information, providing corrected details may be a reason for seeking revocation.
- Businesses that experienced a setback leading to the cancellation may seek revocation when they have successfully overcome the challenges and are ready to resume operations.
- Changes in the legal structure or ownership of the business.
- If a taxpayer voluntarily surrendered their GST registration and subsequently wished to continue under the GST framework.
- When a business demonstrates a commitment to complying with GST rules and regulations, addressing concerns that led to the initial cancellation.
What is the Information Required for the Revocation of GST Registration?
When seeking the revocation of Goods and Services Tax (GST) registration through the appellate authority, certain crucial information and documents need to be furnished. The required information includes:
- A copy of Form GST APL-01, which is the application form for filing an appeal to the appellate authority.
- The provisional acknowledgement copy was received during the application process for revocation.
- A copy of the GST cancellation order issued by the proper officer.
- A copy of the Show Cause Notice given as part of the GST registration cancellation process.
- A copy of the GST Registration Certificate for the business entity.
- A copy of the affidavit submitted as part of the revocation application.
- Copies of the latest GST returns filed for the last two months.
- A document providing a concise description of the type of business conducted.
It is important to note that all these required documents must be submitted within 7 days of filing the appeal, and the submission should be done electronically. Making certain that these documents are comprehensive and accurate is critical for a smooth and effective revocation procedure through the appeal authority.
What is the Timeline for the Revocation of GST Registration?
A registered taxable person has a window of 30 days from the date the order of GST registration cancellation is served to apply for the revocation of that cancellation. It’s important to note that the option for revocation is applicable only when the registration has been cancelled by the proper officer involuntarily.
This provision does not extend to cases where a taxpayer opts for voluntary cancellation of their GST registration.
What is the Application for Revocation of GST Registration?
The registered person is required to submit an application using FORM GST REG-21 to initiate the cancellation of their GST registration. This can be done directly or through an approved facilitation centre sanctioned by the Commissioner.
What is the Process for the Revocation of GST Registration?
The process for the revocation of GST registration involves several steps, especially when applying online through the GST Portal. Below is a step-by-step guide for the revocation of GST registration:
- Access the official GST Portal by navigating to the official GST website.
- Log in to the GST Portal using the correct username and password.
- Select “Services” on the GST Dashboard, then “Registration” under Services. Select “Application for Revocation of Cancelled Registration”.
- Select the option to request that the previously cancelled registration be cancelled. In the designated box, provide the reason for reversing the GST registration cancellation.
- Upload any necessary supporting documents by selecting the appropriate file. This step ensures that the application is adequately supported.
- Check the verification box, specify the name of the authorised signatory, and fill in the designated fields as required.
- The final step involves selecting either the “Submit with EVC” (Electronic Verification Code) option or “Submit with DSC” (Digital Signature Certificate). This step validates the authenticity of the application.
- Following the submission, the GST officer reviews the application. If satisfied, the officer may proceed with revoking cancelled GST registration.
What is the Timeline for Processing the Revocation of GST Registration?
Upon being satisfied with the taxpayer’s justification for reversing the registration cancellation, the proper officer has a timeframe of 30 days from the application date to revoke the license.
The officer is required to sign an order using FORM GST REG-22 to reverse the cancellation of registration officially.
What Happens in the Case of Rejection of the Revocation of GST Registration?
In the event that a GST officer is dissatisfied with the revocation application, the officer will issue a notification in FORM GST REG-23. Subsequently, the applicant is required to furnish a comprehensive response using FORM GST REG-24 within 7 working days of receiving the notice.
Following receipt of the applicant’s response, the officer must issue a relevant order in FORM GST REG-05 within 30 days of the date of receipt.
What Happens in the Case of Unqualified Applicant of the Revocation of GST Registration?
Those ineligible to seek the revocation of a cancelled registration include GST practitioners, UIN holders (such as Embassies, UN Bodies, and other Notified Persons), and instances where the registration was cancelled at the taxpayer’s or legal heir’s request.
What is the Impact of Revocation of GST Registration on Business?
The revocation of Goods and Services Tax registration can have several impacts on a business. Some of them are listed as follows:
1. Resumption of Regular Operations
After revoking cancelled GST registration, a business can resume its regular operations without the constraints imposed by the cancellation.
2. GST Compliance Obligations
The business is once again obligated to adhere to GST compliance requirements. This includes filing returns and fulfilling tax obligations.
3. Reinstatement of Business Image
Revocation can positively influence the perception of customers, suppliers, and stakeholders because it indicates a commitment to complying with tax regulations.
4. Seamless Business Transactions
With the revocation, the business can smoothly engage in transactions without the complications associated with a cancelled GST registration.
Conclusion
It is imperative for taxpayers to promptly request the cancellation of their previously revoked GST registration to avoid complications in the future. Failure to do so may result in significant challenges when applying for a new GST registration.
Sections 29(2)(b) and (c) highlight the conditions that, if still present, could render the application for a new GST registration as “deficient” under Rule 9 of the 2017 CGST Rules, leading to its rejection by the competent authority.
Hence, adhering to GST rules and meeting filing obligations is crucial for businesses to maintain a smooth and compliant transition in their registration status.
Also Read: What Are The Reasons For Suspension Of GST Registration And How To Resolve It
Frequently Asked Questions
Q1. What is the Difference Between Revocation and Cancellation?
During the proceedings for the cancellation of registration, the registration may be temporarily suspended as prescribed. If the department cancels the registration, there is a provision for the taxpayer to request the revocation of the cancellation.
Q2. What are the Reasons for GST Suspension?
A taxpayer’s GST registration or GSTIN may be suspended if they fail to file GST returns for six consecutive months (for monthly filers) or two consecutive quarters (for quarterly filers). This suspension can occur even if the proceedings for GST registration cancellation are still in progress.
Q3. What is Suo Moto Cancellation?
Suo moto cancellation of GST registration occurs when the tax officer initiates cancellation on their own. Section 29(2) of the CGST Act requires the officer to provide reasons for this cancellation.
Q4. What Happens if GST is Suspended?
When a supplier’s GST is suspended, they cannot make taxable supplies, issue invoices, charge taxes, pay taxes, file returns, or claim input tax credit during the suspension period.
Q5. Can you Apply GST After Cancellation?
A taxpayer whose GST registration has been cancelled by the proper officer has the option to apply for the reversal of such cancellation by submitting Form GST REG-21.
It’s crucial to note that this application must be filed within 30 days of receiving the notice for the cancellation of GST registration. Timely submission is essential to initiate the process of reversing the cancellation and reinstating the GST registration.
Q6. Can GST be Revocation After 180 Days?
Yes, it is possible to apply for the revocation of your cancelled GST registration even after 180 days from the date of cancellation.
Q7. How do you Write a Revocation Letter for GST?
[Name of the Business], with GST registration number [GSTIN], and registered under [State], hereby express our intention to surrender and cancel our GST registration, effective from [Date of Cancellation]. The rationale behind this decision is [Reason for Cancellation].
Q8. How do you Check my GST Cancellation Status?
To check the cancellation status on the GST portal, follow these steps:
- Go to the GST portal and log in.
- In the Service Tab, click on the Registration tab.
- Select ‘View GSTIN Information.’
- Enter the GSTIN and captcha code.
- Check the ‘Current status’ field, which will indicate if the GST registration has been cancelled.
Q9. What is the Late fee for GST Revocation?
The finance ministry has set a maximum late fine of ₹1,000 for registered people who fail to submit the final return in Form GSTR-10 by the due date, provided they do so by June 30, 2023.
Q10. What is the Procedure for Revocation of Suspension in GST?
If you want to apply for the revocation of suspension in GST, follow the steps given below:
- Access the GST portal and go to ‘Services’ > ‘Registration’ > ‘Application for revocation of GST registration cancellation.’
- Provide the necessary details and reasons for reversing the cancellation of GST registration.
Remember to attach supporting documents to make your case stronger.
