Cancellation of GSTIN registration is a process in which a taxpayer who is not eligible or does not come under the purview of the GST regime can cancel their GST registration and surrender their GSTIN.
The tax officials can also cancel the registration granted under GST for various situations per the provisions of the GST law, or the existing taxpayer can voluntarily file for cancellation of their GST registration.
In case of the death of the GST-registered person, the legal heir should apply for cancellation. Upon GST cancellation, the taxpayers will not be paying or collecting tax for the government or, for that matter, cannot claim the input tax credit (ITC).
So, there are varied reasons for one to get their GST registration canceled. Still, it’s subject to several norms and regulations and many are unaware of it. In this article, we will learn about different reasons for the Cancellation of GST registration, who can file for cancellation, etc.
On Feb 01, 2022, Section 29 of the Central GST Act was amended for cancellation of GSTIN by officers:
- Suppose the composition taxpayers fail to file an annual return for three months beyond the prescribed due date of Apr 30 of the following year. In that case, their GST registration can get canceled.
- For other taxpayers, a proper officer will cancel GST registration if they default return filing for the consecutive tax periods as prescribed earlier in the six consecutive months.
Circumstances For Cancellation of GST Registration by Tax Official:
As mentioned under the provisions established by the GST law, tax officials can initiate Suo Moto (On its own) cancellation of GST registration under the following circumstances:
- GST practitioner is found guilty of misconduct with regard to any proceedings established under the GST law.
- A taxpayer fails to pay the tax due amount, interest, or penalty to the Central/State Government for three months since the due date.
- The registered taxpayer collects a certain amount as a tax but fails to make payment of the same to the government beyond the due date of three months.
- If you are a taxpayer not categorized as a composition taxpayer, then not filing returns for a continuous period of six months will attract cancellation of GST registration.
- A person supplies or sells goods and/or services without any invoice, violating the provisions, with the clear intention to evade tax.
- Or if a person issues an invoice without the actual supply of goods and/or services in violation of the provisions of the GST act to avail the ITC or refund of tax.
- Closure of business due to discontinuance of business activity.
- Change in the constitution of business leads to change in PAN.
- When a person is no longer required to collect tax at source under the provisions established by the GST law.
- When a person is no longer required to deduct tax at source under the provisions established by the GST law.
- A person is not required to remain registered under the provisions of the GST law.
The tax officials can initiate Suo Moto cancellation of GST registration only when there is a valid reason, as mentioned above and specified under Section 29(2) of the CGST/SGST Act.
Suppose the tax officials have initiated Suo Moto GST registration cancellation and issued a show cause notice. In that case, you need to file your response within seven days to file a reply.
GST Cancellation By Taxpayer:
Who can apply for cancellation of GST registration?
- All existing taxpayers.
- Any migrated taxpayer whose application for enrollment has been approved.
Who cannot file for cancellation of GST Registration?
- Persons registered under Tax Deductors/ Tax Collectors
- Persons have UIN allotted.
Circumstances Under Which Taxpayer File For Cancellation of GST Registration:
On the occurrence of any of the below-mentioned events, a registered taxpayer can file for cancellation of GST registration:
- Closure of business
- Not carrying out the intended business activity
- Amalgamation, Merger, de-merger, lease of business or formation of a new entity.
- Taken up voluntary GST registration but failed to commence any business activity within the specified time.
- In the event of the death of the sole proprietor.
A taxpayer can apply for cancellation of GST registration in Form GST-REG-16, and it is necessary to give proper reasons for cancellation.
Filing For Cancellation of GST Registration by Legal Heir:
In case of the death of the sole proprietor, the legal heir has to visit and meet the office of the proper officer and submit the death certificate copy along with your succession certificate as documentary evidence.
Upon satisfaction with the submitted documents, the proper officer will add a legal heir as the authorized signatory of the GST Portal. If the successor is a minor, he cannot be added as an authorized signatory; in that case, the minor must be represented by the legal/natural guardian.
Now, the legal heir can transfer the ITC to a new entity in case of the death of the sole proprietor.
One pertinent question to many business owners i.e., can the business register for GST after cancellation?
The answer is YES. There is no restriction in any form for getting new GST registration once it has been canceled, except that the tax officer shouldn’t cancel it.
For canceling once GST registration, numerous provisions are defined under the GST law. Suppose you are a GST-registered person but not conducting business. In that case, it is best to cancel your GST voluntarily instead of allowing the tax officer to initiate the Suo Moto cancellation procedure. They lead to paying additional fees and penalties.
GST has become an integral part of the Indian business ecosystem; if you are a business owner looking for assistance in GST Regsitration or GST cancellation, feel free to talk to eAuditor Office professional experts. We will be happy to assist you and provide you with much-required clarity.
Author : Dharani
Date : 12-Oct-2022