GST Cancellation

What Is Cancellation Of GST Registration?

When GSTIN number issued to the registered taxpayer cancelled by the taxpayer himself voluntarily or by the central tax authority, it is known as cancellation of GST registration. GST cancellation is basically done to surrender GST number and to opt out of GST scheme. It is mandatory for certain businesses to apply for GST registration. After GST cancellation, you will not be considered as a registered person under GST scheme and you don’t have to pay or collect any GST. If you are still running your business after GST cancellation, you will be liable to pay high penalties to the income tax department. Tax officer is responsible for cancellation of GST registration in India.

In case of voluntary registration, cancellation application can only be made after one year from the date of registration by the registered taxpayer.

Reasons for GST Cancellation

There are various reasons for GST cancellation which are as follows –

1. Persons registered under any of the previous tax laws are not liable for registration under GST act.

   For example – The threshold limit for registration of already registered persons under VAT was Rs.10 Lakhs which has been extended to Rs.40 lakhs for GST registration and therefore persons who were registered under VAT are not liable for registration under GST scheme.

2. Discontinuation of business is also considered one of the reasons for GST cancellation. GST number can be cancelled in the following situations –
   • Business discontinuation
   • Transfer of business (either full or partial) includes the death of the proprietor.
   • Combining of one business entity with other known as amalgamation.
   • Any change in the constitution of business results in GST number cancellation.
   • Any registered taxable person who is no longer entitled for GST registration can go for GST cancellation. It excludes persons or individuals registered voluntarily under section 25(3) of the CGST act.
   • In case a person registered under GST composition scheme fails to submit the return for 3 months continuously, GST number of the concerned person will be cancelled by the tax authorities.
   • Every registered person must comply with GST laws and provisions. Non-Compliance with any of the GST laws & provisions will be considered as an offence and results in GST cancellation under GST act.
   • There are certain cases where persons take voluntary registration under section 25(3) of the CGST act but don’t start their business within 6 months from the registration date results in GST cancellation.
   • If a person registered under GST unable to submit GST returns for the period of 6 months continuously, GST number of the concerned person will be cancelled by the tax authorities.
   • If any person obtains registration by means of fraud, misstatement or suppression of facts, GST registration of the concerned person will be cancelled by the tax authorities.

Who Can Cancel the GST registration?

There is a standard procedure which is to be followed by the tax officer for cancellation of GST registration in India. A show cause will be sent by the tax officer to the registered person that he or she needs to answer within 7 working days from the date of GST cancellation order. The registered person needs to reply this notice within the specified time unless the GST registration will be cancelled by the tax authorities.

Cancellation of GST registration can be done by the following persons –

1. By the taxpayer
2. By tax officer
3. By legal heirs (in case of death of taxpayer)

Who can file for cancellation of GST registration in India?

The following persons can file for GST cancellation online in India –

• Existing taxpayer
• Migrated taxpayer whose enrolment application has been approved
• Migrated taxpayer who has not filed any other form after filing the enrollment application.

Who Cannot File For Cancellation of GST registration in India?

Following persons cannot file for GST cancellation online in India –

• Persons registered as tax deductors/tax collectors.
• Persons with unique identification number (UIN)

How to Cancel GST Registration?

Procedure for GST cancellation by the tax officer

Certain procedure has been specified by the tax department for cancellation of GST registration. Following steps must be followed by the applicant while filing application for cancellation of GST registration in India –

Procedure for GST cancellation by the taxpayer voluntarily

Filing Your Final GST Return (GST F8)

GST 8 form is the final GST return issued by the GST department containing all the relevant information till the last date of GST deregistration. It is mandatory for every GST registered business –

• To submit complete GST F8 form within one month period from the end of the accounting period mentioned on the return.
• To settle all outstanding GST returns & payments (in case if any)

Effective Date of Cancellation

Effective date of cancellation means the date of cancellation of GST registration. Sometimes taxpayer applies for revocation of GST cancellation; therefore effective date of cancellation may vary according to the situation.

Revocation of GST Cancellation

What is revocation of cancellation?

The revocation of GST cancellation means reversing the decision of “cancelling the registration” and considering it again as a valid GST registration.

When is revocation of cancellation applicable?

Revocation of cancellation of GST registration is applicable at the time when GST registration of a taxable person is cancelled by the tax officer. You must apply for revocation of GST cancellation within 30 days from the date of cancellation. You need to submit an application for the revocation of cancellation of registration to the tax authorities. Tax officer has the authority to accept or reject the application sent by the taxpayer for GST revocation.

Procedure for revocation of GST cancellation

1. In the first step, a person registered under GST scheme can submit an application via form GST REG-21 (in case registration is cancelled by suo moto by the tax officer)
2. Registered person must submit the application to the tax authorities within 30 days via GST portal.
3. If tax officer become satisfied, he or she revokes the process of cancellation by issuing order via form GST REG-22 within 30 days from the date of receipt of the application.
4. In case tax officer is not satisfied with the application sent by the taxpayer for revocation, he or she can reject the application via form GST REG-05 and sends a show cause notice to the applicant. The applicant needs to answer this notice within 7 days from the date of notice. It is sent by the tax officer to get explanation from the taxpayer about “why this application should not be rejected”.
5. After receiving the reply from the applicant, tax officer needs to take the decision within 30 days from the date of notice received by the taxpayer via form GST REG-24.