15 Reasons Why Your GST Registration Can Be Suspended
Goods and Services Tax Laws in India are new and are subject to various compliances and amendments. It becomes necessary to keep up with the legal requirements and compliances related to GST to avoid situations that might lead to suspension of the GST registration of a registered user.
What are the reasons for suspension of a GST registration?
- Section 29 of Central goods and services tax (CGST) states the rules and procedures regarding suspension of GST registration. There are mainly 15 circumstances under which a registered user might lose his/her registration which are in detailed described below:
- Section 29 (1) (a) of CGST, If the business of the registered user is discontinued, merged or demerged, transferred, or disposed of entirely for any reason which also includes the death of the sole proprietor.
- Section 29 (1) (b) of CGST, if the business for which the registration was taken, changes its constitution of undertaking.
- Section 29 (1) ( c) of CGST, in case the taxpayer has opted out under the ambit of Voluntary GST registration or is no longer required to be registered under the GST provisions.
- Section 29 (2) (a) of CGST, if the taxpayer any time goes against the rules and provisions of the CGST Act, 2017 or CGST Rules, 2017.
- Section 29 (2) (b) of CGST, if the taxpayer paying tax under the composition levy, fails to file returns for three consecutive quarters.
- Section 29 (2) ( c) of CGST, if the taxpayer paying tax under any other provisions other than Composition Levy has failed to file returns for six consecutive months.
- Section 29 (2) (d) of CGST, if the taxpayer falls under the ambit of voluntary registration, and has been granted registration but he/she fails to commence business within six months from the date of registration.
- Section 29 (2) (e) of CGST, if the taxpayer has obtained the registration through willful concealment of facts, fraudulent means, or willful misstatement.
- Rule 21 (a), if the taxpayer fails to commence his/her business from the place that was mentioned at the time of registration.
- Rule 21 (b), in case the taxpayer issues an invoice without the actual supply of goods or services in violation of the CGST Act, 2017 or Rules provided.
- Rule 21 (c ), in case the taxpayer violates the section 171 of CGST which mentions anti profiteering measures.
- Rule 21 (d), in case the taxpayer does not furnish complete and accurate details of bank account thus violating Rule 10A of the CGST Rules, 2017.
- Rule 21 (e), if the taxpayer obtains Input tax credit (ITC) in pursuance of violation of rules and provisions of Section 16 of the CGST Act, 2017 which states eligibility and conditions for taking ITC.
- Rule 21 (f), if the amount of outward supplies (sales) mentioned in Form GSTR-1 (under Section 37 of the CGST Act, 2017) for one or more tax periods is more than the amount of outward supplies (sales) declared in the GST return Form GSTR-3B (under Section 39 of the CGST Act, 2017 – Furnishing of returns) for the said tax periods.
- Rule 21(g), if the taxpayer violates the provisions of Rule 86B of the CGST Rules 2017 which states the restrictions on use of amounts available in electronic credit ledger that it does not pay the output tax liability in cash.
As the reasons for suspension of the registration are already cleared, the other important part is to know who has the authority to suspend the GST registration.
When a user’s registration is suspended the taxpayer will not be able to pay tax or file a GST return. The important thing to note is that if the suspended user falls under the category of taxpayer, he/she is required to file for fresh GST registration. In case the user does not apply for fresh GST registration, the GST authority will have the authority to impose penalties for non-compliance with GST laws.
An individual who is liable to pay tax under the GST Law shall make sure that he/she adheres to all the rules and provisions of GST Law. A suspension or cancellation of GST registration might create problems and attract hefty penalties. Further, the individual or the company shall take all the necessary steps to secure its registration.
Author : Riya
Date : 30-Jun-2022