Cancellation of GST registration. WHY? WHEN? HOW?
Updated: Jan 8
GST Registration Cancellation
Cancellation of GST registration obtained in India is possible. It can be canceled by the registered person or by an officer or by the legal heirs of the registered person, in case of death of the person.
Who Are Entitled To Cancel GST Registration?
An Officer under GST Act can either on his own accord or an application filed by the registered person or by legal heirs of the registered person (in the event of the death of such person), can cancel a GST registration.
However, a registered person who obtained GST registration on a voluntary basis cannot apply for GST Registration cancellation until one year has expired from the effective date of registration.
A GST registration granted to a person can be canceled by an Officer suo-motu, on the occurrence of any of the following events:
1. The registered person does not conduct any business from the declared place of business.
2. The registered person has issued invoice or bill without actual supply of goods or services which is considered a violation of the GST Act and/or GST rules.
Before proceeding to cancel the GST registration, the Officer shall be required to issue a show cause notice to such person whose GST registration is liable to be cancelled, requiring show cause within 7 working days from the date of service of such notice asking for the reason as to why GST registration should not be cancelled. The registered person is entitled to reply to the show cause notice within the prescribed time or the GST registration can stand cancelled.
Why GST Registration can be cancelled:
Pursuant to the provisions of Section 29 of the CGST Act, a GST registration cancellation can be initiated under the following situations:
1. Discontinuance or closure of a business.
2. Transfer of business for reasons of amalgamation, merger, de-merger, sale, lease or other pertinent reasons.
3. Change in the constitution of business, which results in a change of PAN.
4. Taxpayers who are not required to get registered mandatory under the GST law.
5. Death of the sole proprietor.
6. Any other reason which should be stipulated in the application.
Who can File Application for cancellation:
Following persons are entitled to apply for a cancellation of registration as per the provisions of the CGST Act:
1. All registered taxpayers excepting those who are regulated under rule 12, which covers registered persons requiring to deduct or collect tax at source, and Taxpayers granted with UIN.
2.The legal heir of a registered person.
Cancellation Application Form:
Form GST REG-16 is the form in which application for cancellation has to be made. The form is available on the common GST portal which may be filed within 30 days of the “occurrence of the event warranting the cancellation.”
Mandatory Information Required:
Following information is mandatory while applying for a cancellation in Form GST REG-16:
1. Contact address, which includes the mobile number and e-mail address.
2. Grounds of cancellation.
3. The desired date of cancellation.
4. The value and the tax payable on the stock of inputs, the inputs available in semi-finished goods, inputs available in finished goods, the stock of capital goods/plant and machinery.
5. Particulars of registration of the entity wherein the existing unit have been merged, amalgamated, or transferred.
6. Particulars of the latest return filed by the taxpayer along with the ARN of the particular return.
While applying for a cancellation, it is mandatory for the applicant to pay the input tax contained in the stock of inputs, semi-finished goods, finished goods, and capital goods or the output tax liability of such goods, whichever is higher. The payment may be made through debiting either the electronic credit or cash ledger. The obligation, though considered essential, may even be fulfilled during the submission of final return in GSTR-10.
Grounds of Rejection and Non-acceptance of Application:
The concerned officer may decide against accepting the application on the basis of the following:
1.The submitted application is incomplete.
2.Where in the event of transfer, merger or amalgamation of business, the new entity hasn’t registered with the tax authority prior to the submission of application.
In these situations, the concerned officer provides a written intimation to the applicant regarding the nature of the discrepancy. In that event, the applicant shall be required to respond to the same within seven days of the date of receipt of the letter, failing which the concerned officer may reject the application altogether after providing him/her with an opportunity to be heard. The reasons for rejection shall be recorded by the Officer.
Mandatory filing of Final Return:
Upon cancellation of GST Registration, it is mandatory to file a final GST return in Form GSTR-10 within three months of the date of cancellation or the date of order of cancellation, whichever is later.
Final Return Not filed:
If the final return isn’t filed in Form GSTR-10, the taxpayer will be issued a notice in GSTR-3A, prompting him/her to do the same within 15 days of the issue of such notice. In the event of failure on the part of the taxpayer to comply with the notice, steps will be taken to assess the liability of the taxpayer based on the information available with the concerned officer. The assessing order will be withdrawn if the applicant files the return within 30 days of the issue of notice. However, the taxpayer wouldn’t be reprieved of remitting the late fee and interest.