All you need to know about suspension of GST Registration

Navdisha Sehgal

17 Mar, 2023

The addition of the provisions with respect of suspension of GST Registration to monitor the GST registered taxpayer. With the introduction of these provisions, anyone who has applied for cancellation of GST Registration, will be unbound to comply with the GST return filing procedure during the period of suspension, in so doing it reduces the cost of compliance for the taxpayer.

What is GST?

GST stands for Goods & Services Tax, which is an indirect tax and it replaced many direct taxes like VAT, excise duty, etc. The GST Act was passed on 29^th March, 2017 w.e.f 1^st July, 2017.

Benefits of GST

• GST eliminates the cascading effect of tax.
• Higher threshold for registration.
• Composition scheme for small businesses.
• Simple and easy online procedure.
• The number of compliances is lesser.
• Defined treatment for E-commerce operators.
• Improved efficiency of logistics.
• Unorganized sector is regulated under GST.

What is suspension of GST Registration?

The Indian Government introduced a new concept of suspension of GST Registration. Rule 21A of the GST Rules 2017^[1] that deals with suspension.

Grounds for suspension

Sub- rule 2A of rule 21A of the GST Rules states that if any proper officer finds any differences by:

• Comparing the details mentioned under Form GSTR 1 & 3B in relation to outward supplies, or
• Comparing details mentioned in Form GSTR 2B with GSTR 3B in relation to inward supplies, or
• Any other analysis.

The officer needs to issue Form GST REG-31 to intimate the taxpayer of the discrepancies. He also has to mention that the GST registration may be cancelled, if the proper explanation is not given.

The officer can order for suspension under Rule 21A (2A), if he is not satisfied with the furnished information. The suspension can be lifted upon the receiving of a satisfactory reply from the taxpayer.

What is the period of suspension of the GST Registration?

As per the rule 21A the period for suspension can be:

• Date of submission of registration cancellation application.
• Date from which the cancellation is sought.

Effect of suspension of GST Registration

Once a person’s GST is suspended, he:

• Cannot make any taxable supply after the suspension.
• Is not required filing any returns as needed under section 39 of GST Act, 2017.

The reduction in the compliance is an advantage in the whole process of the suspension of GST Registration enjoyed by the taxpayer.

Procedure for suspension of GST Registration?

With the introduction of these provisions, anyone who has applied for cancellation of GST Registration will be unbound to comply with the GST return filing procedure during the period of suspension, in so doing it reduces the cost of compliance for the taxpayer.

The suspension will be done in the following manner:

• Differences in the information submitted by the taxpayer,
• System generated intimation for the suspension of the registration and notice for cancellation thereon in Form GST REG-31 will be made available to taxpayer.

Notably, Form GST REG-31 is not available on the GST portal and accordingly the suspension notice/ intimation, for the time being, would be available in Form GST REG-17.

• On receipt of notice/ intimation, the taxpayer should submit an appropriate reply in Form GST REG-18. Such reply should be submitted within a period of 30 days from the date of receipt of notice/ intimation.
• Based on the reply received, the proper officer shall take any of the following action-
  1. Issue order dropping the suspension proceeding in Form GST REG-20; or
  2. Issue order cancelling GST registration in Form GST REG-19.

• On the basis of the action taken by proper officer, the status of taxpayer will be changed to any of the following-
  1. Active – when suspension proceeding is dropped; or
  2. Cancelled Suo-moto – when GST registration is cancelled.

How to revoke the suspension of GST Registration?

The suspension can be revoked after completion of GST registration cancellation proceedings. The revocation of suspension would be effective from the date the suspension has come into effect.

Conclusion

GST is the only indirect tax applicable since 2017 and it is important to know the intricacies of the concept. The article talks about the suspension , its grounds, effect and the duration. It also talks about the process by which GST Registration can be suspended by the officer.

Read our article:How to Change GST Registration details of a business in Easy Steps