Introduction

The Goods and Services Tax (GST) is a comprehensive tax levied on the supply of goods and services across India. Businesses registered under GST must comply with various regulations and periodically file returns. However, there may arise situations where a business owner or a tax officer decides to cancel the GST registration. Here we provide a detailed guide on the cancellation of GST registration, including the reasons, procedures, and consequences of such a decision.

Overview of Cancellation of GST Registration

Cancellation of GST registration refers to the termination of the GST registration, which means the business entity will no longer be liable to collect and pay GST. This process can be initiated either by the taxpayer or by a tax officer under certain circumstances.

Consequences of GST Registration Cancellation

• Inability to Collect GST: Once the GST registration is canceled, the business cannot collect GST from customers.
• Ceasing of GST Compliance: The business is no longer required to file GST returns or comply with other GST regulations.
• Reversal of Input Tax Credit: The business may need to reverse the input tax credit availed on stock or capital goods.

Who Can Cancel the GST Registration?

GST registration can be canceled by:

• The Registered Taxpayer: When the taxpayer voluntarily chooses to cancel the registration.
• The Tax Officer: When the tax authorities find valid reasons to cancel the registration.

Steps for Cancelling GST Registration by the Migrated Taxpayers on the GST Portal

1. Login to GST Portal: The taxpayer needs to log in to the GST portal using their credentials.
2. Navigate to Cancellation Application: Go to the ‘Services’ tab, select ‘Registration’ and then ‘Application for Cancellation of Registration.’
3. Fill the Application: Fill in the necessary details and provide the reason for cancellation.
4. Submit the Application: After filling out the form, submit the application along with any required documents.
5. Confirmation: Once submitted, the application will be processed, and confirmation of cancellation will be provided.

Cancellation by Taxpayer

Why Does a Taxpayer Wish to Cancel His Registration?

A taxpayer may wish to cancel GST registration due to various reasons:

• Closure of Business: When the business operations are permanently shut down.
• Change in Constitution: When the constitution of the business changes, such as from a proprietorship to a partnership.
• Exempted Goods/Services: If the business exclusively deals in exempted goods or services.
• Turnover Below Threshold: If the annual turnover falls below the threshold limit for GST registration.

Forms for Cancellation

Different forms are used for different cancellation scenarios:

• Form GST REG-16: Application for cancellation of GST registration by the taxpayer.
• Form GST REG-17: Show cause notice for cancellation of registration.
• Form GST REG-18: Reply to the show cause notice.
• Form GST REG-19: Order for cancellation of registration.
• Form GST REG-20: Order for dropping the proceedings for cancellation of registration.
• Form GST REG-21: Application for revocation of cancellation of registration.

Cancellation by Tax Officer

Why Will the Officer Cancel Registration?

A tax officer may cancel the registration under certain circumstances:

• Non-compliance: Repeated non-filing of GST returns.
• Fraudulent Activities: Involvement in fraudulent activities or misuse of GST provisions.
• Violation of Provisions: Violation of any provisions of the GST Act.

Procedure

1. Issuance of Show Cause Notice: The officer issues a show cause notice (Form GST REG-17) to the taxpayer.
2. Response from Taxpayer: The taxpayer must respond within the prescribed time frame using Form GST REG-18.
3. Review by Officer: The officer reviews the response and decides whether to cancel the registration.
4. Cancellation Order: If the response is not satisfactory, the officer issues a cancellation order using Form GST REG-19.

Revocation of Cancellation of Registration

What is Revocation of Cancellation?

Revocation of cancellation refers to the process of restoring a canceled GST registration. This can only be done if the cancellation was initiated by the tax officer and not by the taxpayer.

Procedure

1. Application for Revocation: The taxpayer needs to apply for revocation using Form GST REG-21 within 30 days from the date of cancellation order.
2. Review by Officer: The officer reviews the application and may ask for additional information.
3. Order for Revocation: If satisfied, the officer revokes the cancellation using Form GST REG-22. If not satisfied, a rejection order is issued using Form GST REG-05.

Who Cannot File for Cancellation of Registration Under GST?

• Taxpayers Under Investigation: Those under investigation or audit for tax evasion or fraud cannot file for cancellation.
• Registered Taxpayers with Ongoing Liabilities: Taxpayers with pending tax liabilities or returns are not eligible for cancellation until they clear their dues.

Consequence of Cancellation of GST Registration

• Liability to Pay Tax: Even after cancellation, the taxpayer is liable to pay any outstanding tax and file final returns.
• Non-availability of Input Tax Credit: No input tax credit can be availed on the stock held after cancellation.
• Legal Consequences: Engaging in taxable activities without registration post-cancellation is illegal and may attract penalties.

Required Information for Filing Cancellation of Registration under GST

• Business Details: Name, address, and GSTIN of the business.
• Reason for Cancellation: Specific reason for seeking cancellation.
• Details of Stock: Information about stock held on the date of application.
• Outstanding Liabilities: Details of any pending tax liabilities.
• Documents: Supporting documents as required, such as business closure proof or sale deed.

Conclusion

The cancellation of GST registration is a crucial process for businesses that decide to cease operations or no longer meet the requirements for GST registration. Both taxpayers and tax officers can initiate this process under specified conditions. Understanding the procedures, forms, and consequences involved in GST registration cancellation ensures compliance with GST laws and avoids potential legal issues. Whether you’re a taxpayer looking to cancel your registration or a tax professional assisting clients, being well-informed about the cancellation process is essential for smooth and hassle-free compliance.

FAQs on Cancellation of GST Registration

1. What is Cancellation of GST Registration?

Cancellation of GST registration means the registered taxpayer is no longer liable to collect and pay GST.

2. Who can cancel GST registration?

GST registration can be canceled by the registered taxpayer or by a tax officer under certain circumstances.

3. What are the consequences of canceling GST registration?

Consequences include inability to collect GST, ceasing of GST compliance, and reversal of input tax credit on stock and capital goods.

4. How can a taxpayer cancel their GST registration?

Taxpayers can cancel their GST registration through the GST portal by submitting an application for cancellation.

5. What forms are used for cancellation of GST registration?

Forms include GST REG-16 for application, GST REG-17 for show cause notice, GST REG-18 for response, and GST REG-19 for cancellation order.

6. Can a tax officer cancel a taxpayer’s GST registration?

Yes, a tax officer can cancel registration for reasons like non-compliance, fraudulent activities, or violation of GST provisions.

7. What is the procedure for revocation of cancellation of GST registration?

Taxpayers can apply for revocation within 30 days of the cancellation order using Form GST REG-21.

8. Who cannot file for cancellation of GST registration?

Taxpayers under investigation or with pending tax liabilities cannot file for cancellation until issues are resolved.

9. What information is required for filing cancellation of GST registration?

Required information includes business details, reason for cancellation, stock details, outstanding liabilities, and supporting documents.

10. Why might a taxpayer wish to cancel their GST registration?

Reasons include business closure, change in business constitution, dealing exclusively in exempt goods/services, or turnover below the threshold limit.

11. What happens if GST registration is canceled but the taxpayer engages in taxable activities?

Engaging in taxable activities without registration post-cancellation is illegal and may attract penalties.

12. What is the consequence of not responding to a show cause notice for cancellation?

Failure to respond may result in the tax officer proceeding with the cancellation of the GST registration.

13. Can a canceled GST registration be restored?

Yes, if a tax officer made the cancellation, the registration can be restored by applying for revocation within the specified timeframe.

14. What is Form GST REG-21 used for?

Taxpayers use Form GST REG-21 to apply for the revocation of the cancellation of GST registration.

15. Is it mandatory to reverse input tax credit after cancellation?

Yes, businesses may need to reverse the input tax credit availed on stock or capital goods post-cancellation.