Legal Provisions Concerning Cancellation of GST Registration

Ashish M. Shaji

18 Aug, 2021

GST Registration is necessary for those businesses that fulfil the eligibility criteria. However, there are times when you would want to cancel your GST registration due to various reasons, such as GST doesn’t apply to you anymore or you are shutting your business or the tax officer orders cancellation. There are certain legal provisions concerning cancellation of GST Registration which are discussed in this article. 

Brief Background

According to GST law, if your activity falls within the ambit provided under Chapter VI Registration (CGST Act, 2017), then you are required to get registered under this law. If the registered person is not required to be registered under GST, then such person can voluntarily apply for the cancellation of GST Registration. If it is approved by the proper officer, the registered person will cease to be a registered person and will not be required to comply with the obligations of the GST law^[1].

When the registered person ceases to be a registered person, then such person will also not be eligible to avail of any benefits as provided to the registered person under the GST law.

Cancellation of GST Registration: Legal Provisions

The cancellation may be of the entire business or may be of one or more registrations gained by the registered person. In this segment, we have discussed the relevant legal provisions concerning the same.

• Filing an application for cancellation

Section 29(1) (a) (CGST Act) provides for the cancellation of registration. It says that the proper officer can, through his motion or through an application filed by a registered person, cancel the registration where the business has been discontinued, transferred fully, amalgamated with other entity, demerged or disposed of. Further, the registered person is not required to be registered under Sections 22 or 24.

Rule 20 (CGST Rules, 2017) provides that a registered person seeking cancellation of registration under sub-section (1) of section 29 shall submit an application electronically, including therein the inputs details held in stocks or inputs contained in semi-finished or finished goods held in the stock and of capital goods held in the stock on date from which the cancellation is sought and may furnish relevant documents at the common portal within 30 days of the occurrence of the event warranting cancellation.

• Registration Suspension

Rule 21 A states that where a registered person applied for cancellation of registration (Rule 20), the registration will be deemed to be suspended from the date of application submission or the date from which the cancellation is sought.

Further, sub-rule 3 states that a registered person whose registration is suspended under sub-rule (1) or sub rule (2) [or sub-rule (2A)] will not make any taxable supply during the suspension period and will not have to furnish any return under Section 39.

• Order of cancellation

As per rule 22(3), if a person who submitted an application for cancellation of his registration is not required to be registered anymore or his registration is liable to be cancelled, the proper officer will issue an order within 30 days from the date of application submission under Rule 20 or as the case can be, the reply date to the show cause issued under Sub-rule (1) [sub rule (2A) of rule 21A] cancel the registration. The proper officer shall notify the taxable person directing him to pay arrears of any tax, interest, or penalty.

Essentials with respect to actionable for cancellation of GST Registration

Here are certain essentials to be known with respect to actionable for cancellation of the registration:

• The taxpayer should provide a valid reason for discontinuation of business from this place;
• The taxpayer must apply for cancellation of registration within 30 days of occurrence of event warranting cancellation;
• When the application is submitted, the registration will deemed to be suspended from the submission date of the application or date from which such cancellation is sought till the completion of proceedings for cancellation;
• It may be noted that no outward  taxable supply can be made and subsequently cannot levy tax or issue tax invoice during the suspension, and there is also no requirement of filing returns by the taxpayer;
• Under sub-rule (1), suspension of registration will be deemed to be cancelled on completion of proceedings from the date on which the suspension came into effect;
• The order of cancellation of registration will be sent within 30 days from the date of application submission;
• Form GSTR 10 is to be filed (Final return of the date of cancellation or date of order of the cancellation, whichever is later). Form GSTR-10 should include any reversal, if needed according to Rule 44.

Conclusion

The reason for cancellation of GST registration could range from closure of the business or transfer of the business or change in PAN etc. However, you must know that you cannot file for cancellation if you happen to be a tax deductor, tax collector with an UIN allotted. Cancellation of registration in simple words refers to the fact that the registered person will not be a GST registered person anymore.

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