A Comprehensive Guide on Cancelling GST Registration

You can cancel your GST registration for either or both of these reasons if the tax officer decides to cancel or you’re closing your business or profession. This article will walk you through the various cancellations and the procedure.

What is meant by the Cancellation of GST Registration?

A taxpayer won’t be considered registered under GST if their registration is cancelled. This also means they will no longer be permitted to pay, collect, or claim GST or make an input tax credit claim. Hence, they will not be required to file GST returns. 

What will be the Consequence of Cancelling GST Registration?

A taxpayer will face the following consequences for cancelling their GST registration:

1.  They won’t have to pay GST henceforth. 

2. GST registration is mandatory for some businesses. If the business is still operating after the cancellation of the GST registration, it will be in violation of GST law, and severe penalties will be imposed.

Who can Cancel GST Registration?

GST registration can be cancelled by the following:

1. If the taxpayer requests it. This is valid under two cases - 

   1. The turnover is less than the threshold.

   2. Other cases.

2. Under the tax officer’s order.

3. Requested by legal heirs in the event of taxpayer’s demise. 

Cancelling the GSTIN for Migrated Taxpayers

After the introduction of GST, everyone registered under the previous tax law was required to switch to GST. Most of them were not liable to be registered under GST. For instance, the threshold for service tax and VAT in most states was Rs. 10 lakh, whereas the threshold for GST is Rs. 20 lakh. (For a supply of goods in some states, the amount is Rs. 40 lakh, or Rs. 10 lakhs in some special category states and union territories. Such a taxpayer was required to use the GST portal and submit an electronic application in the form GST REG-29.) 

Nevertheless, they had to make sure you weren't making interstate supply because, except for service providers, interstate suppliers are required to register. After doing the necessary assessment, the authorised officer will cancel the registration.

Here are the steps to cancel GSTIN that migrated taxpayers must follow:

Step 1: Log in to the GST portal and click on “Cancellation of Provisional Registration”

Step 2: You’ll be redirected to the Cancellation Page. Your GSTIN and business name will be automatically displayed. You will be required to provide the reason for cancellation. You will also have to mention if you have issued any tax invoices during the month. 

Step 3: Provide the details of the authorised signatories. If you’re a sole proprietor or a partnership firm, click “submit with EVC”. Companies and LLPs must click on “Submit with DSC”. 

The above service is available to taxpayers who still need to issue tax invoices. The taxpayer must complete Form GST REG-16 if they have issued any tax invoices.

Cancellation of GSTIN by Taxpayers other than Migrated

Possible circumstances under which the Taxpayers might want to cancel their GSTIN:

1. Their business is discontinued.

2. The transferee (or the new company from the amalgamation or demerger) must register if the business has been fully transferred, amalgamated, demerged, or otherwise disposed of. If the transferor no longer exists, it will have its registration cancelled.

3. The constitution of the business is changed. 

Forms Required for Cancellation

Anyone unable to use the above method must submit a cancellation request using the form GST REG 16. The legal heirs of the decedent taxpayer will proceed according to the steps below:

1. A cancellation request must be submitted using form GST REG 16.

2. Form GST REG 16 must include the following information: Details of inputs, semi-finished goods, and finished goods in stock on the date registration cancellation is applied, the liability thereon, and payment details. 

3. Within 30 days after the application date, the proper authority must issue an order for cancellation in the GST REG-19 form. The officer will inform the taxable person that the cancellation is in effect as of the date he has chosen.

Cancellation of GSTIN by a Tax Officer

Possible circumstances under which a tax officer will cancel a registration if a taxpayer:

1. Does not operate a business at the stated place of business.

2. Issues a bill or invoice without providing the requested goods or services. 

3. Violates the anti-profiteering rules (for instance, by failing to pass on ITC benefits to customers).

4. Uses an ITC from an electronic credit ledger to relieve more than 99% of the tax liability for specific taxpayers who violate Rule 86B where the total taxable value of their supplies exceeds Rs. 50 lakh in a month, with few exceptions.

5. Is unable to submit GSTR-1 because GSTR-3B was not submitted for more than two consecutive months (or one quarter for those who choose to participate in the QRMP scheme).

6. Avails the input tax credit in defiance of the rules or the restrictions of Section 16 of the Act.

Procedure

1. A show-cause notice in GST REG-17 will be sent to the individual whose registration the proper officer has decided to cancel.

2. Within seven days of receiving the notice, the person must respond in form REG-18 explaining why their registration should not be cancelled.

3. If the response is deemed enough, the relevant authority will dismiss the case and issue an order in the GST REG-20 form.

4. The relevant official will issue an order in the form GST REG-19 if the registration must be cancelled. The order will be sent within 30 days of the show cause response date.

Revocation of Cancelling the Registration

The term "revocation" refers to the official cancellation of a decision or commitment. Revocation of cancellation of registration denotes reversal of the cancellation decision, which maintains the registration's validity.

This only applies when a tax official voluntarily cancels the registration of a taxable person. Within thirty days of the cancellation order's date, the taxable person may request the officer for the cancellation to be revoked.

Process of Revoking the Cancellation of Registration

1. If a registered person's registration has been revoked officially by the appropriate authorities, they may file a GST REG-21 application for reversal of cancellation.

2. He must submit it through the Common Portal within 30 days of the day the cancellation order was served.

3. If the authorised officer is satisfied, within 30 days after the application's receipt date, he may, by order in form GST REG-22, revoke the cancellation of registration. The justifications for revoking or cancelling registration must be documented in writing.

4. The proper authority may issue an order in form GST REG-05 rejecting the revocation request and informing the applicant.

5. The proper authority must issue a show-cause notice in form GST REG-23 before rejecting an application, allowing the applicant to defend their claim. Within seven working days of the date of service of the notice, the applicant must respond in form GST REG-24.

6. The authorised officer will decide within 30 days of receiving an explanation from the applicant in form GST REG-24.

7. If the registration has been cancelled cause of the inability to file returns, an application for revocation cannot be submitted. These returns must be provided along with payment of all outstanding tax, interest, and penalty balances.