Aditi Patni & Associates

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Aditi Patni and Associates
Chartered Accountants

GST Registration Cancellation

How to cancel GST registration?

GST registration can be canceled by the registered person or by the GST officer, or by the registered person's legal heirs in case of death of the person under GST. GST registration cancellation means that the person will not be registered under GST anymore, and he will not have to pay or collect GST.

GST registration can be canceled by a GST officer or voluntarily by the person registered under GST. The taxpayer will not pay GST anymore if he cancels the GST registration.

If an individual is still carrying out business after surrendering the GST registration, it will be an offense under GST, and heavy penalties are applicable. There will be no requirement to furnish any GST return.

Who can cancel the GST registration?

Proprietorship firms are required to file Form ITR-3 or Form ITR-4-Sugam.

A GST registration can be canceled by an officer, if:

The registered person under GST does not conduct any business from the declared place of business or

Issues invoice or bill without supply of goods or services violating the GST ACT or GST rules.

If the person having GST registration has not filed GST returns for six months

Before the cancellation of registration, the Officer would issue a notice to the taxpayer whose GST registration is liable to be canceled, requiring show cause within seven working days from the date of service of such notice.
The registered person can reply to the show cause notice within the prescribed time, or the GST registration can stand canceled.

Voluntary cancellation by the registered person

GST registration cancellation can be initiated by the person registered under GST under Section 29 of the CGST Act under the following circumstances:

Discontinuance or closure of a business
Transfer of business, amalgamation, merger, de-merger, lease, or other pertinent reasons.
Change in the constitution of business, which results in a change of PAN.
Turnover reduces below the threshold limit of GST registration.
Death of the sole proprietor
Any other reason, the likes of which must be proved in the application.

Forms to be filed before GST registration cancellation

The taxpayer for canceling GST registration must apply through FORM GST REG 16. The legal heirs of the deceased taxpayers will also follow the same procedure as follows:
Application for cancellation should be made in FORM GST REG 16.
The following details must be included in FORM GST REG 16

Details of inputs, semi-finished, finished goods held in stock on which cancellation is applied.

Liability thereon

Payment Details

The Officer has to issue an order cancellation in the Form GST REG-19 within 30 days from the date the application is made. The cancellation will be effective from a date determined by the Officer, and he will notify the taxable individual.

Cancellation by a registered individual- Form GST REG 16

Issue a showcase notice for cancellation - Form GST REG 17

Reply to show cause notice - Form GST REG 18

Application for revoking the cancellation - Form GST REG 21

Ordering revoking the cancellation - Form GST REG 22.

How to apply for GST cancellation?

Before applying for GST registration cancellation, the taxpayer is required to file all the GST returns. If non-compliance concerning GSTR-3B return or GSTR-1 or GST annual return, the overdue must be filed before initiating the GST cancellation process.

The application for GST cancellation should be made in Form GST REG-16 on the common GST portal. In the GST cancellation application, the following information must be provided.

Contact address, which includes the mobile number and e-mail address. Reason for cancellation.
The desired date of cancellation.
Particulars of 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.
Particulars of registration of the entity wherein the existing unit has been merged, amalgamated, or transferred.
Particulars of the latest GST return filed by the taxpayer along with the ARN of the particular return.

Final GST payment

Before applying for GST cancellation, the applicant must pay all the overdue GST liability. In addition to this, 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, must be remitted by the taxpayer.

The input tax credit on the existing stock must be paid back, as the taxpayer will not be eligible to claim ITC on cancellation of GST registration.

The final GST payment can be made through GST electronic credit or cash ledger. The final payment can also be made during the submission of the filing of the final GSTR-10 return.

Grounds of non-acceptance of cancellation application

Why does the GST registration cancellation application get rejected?

After submitting the GST cancellation application, the application can be approved, and the registration would stand canceled on the date mentioned in the order.
In some instances, the concerned Officer may decide to reject the application if :

The submitted application is incomplete.

In the transfer, merger, or amalgamation of business, the new entity has not registered with the tax authority before applying.

In such circumstances, the concerned Officer provides an intimation in writing to the applicant regarding the discrepancy's nature.

The applicant is required to respond to the same within seven days of the date of receipt of the letter. If the applicant fails to do the same, he may reject the application after providing him/her with an opportunity to be heard.

GSTR-10 final GST return

Every person whose registration is canceled is required 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.

This is done to ensure that the taxpayer is devoid of liabilities. It may be noted that Input Service distributors or Non-resident taxpayers who are required to pay tax under Section 10, Section 51, or Section 52 are exempted from this provision.

If the final GST return is not filed in Form GSTR-10, then the taxpayer will be issued a notice in GSTR -3A prompting him or her to do the same within 15 days of issues of such notice.

If the taxpayer fails to comply with the notice, initiatives will be taken to assess the taxpayer's liability 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.

Consequences of not canceling GST registration

What happens if a GST registration is not canceled?

If there is no business activity after obtaining GST registration, the taxpayer needs to initiate the GST cancellation as per the process laid out. If the taxpayer stops filing the GST returns and lets the GST registration be canceled, then he cannot obtain another GST registration under the same PAN.

If the government cancels a GST registration, the taxable person will first apply for revocation of the GST registration cancellation by paying all the late fees. After restoration, cancel the GST properly or continue filing GST returns.

Hence, once a GST registration is obtained, the taxpayer needs to monitor the compliance. There is no business activity file for cancellation of GST registration at the earliest. The suspension of GST registration can be revoked after the completion of GST registration cancellation proceedings. The revocation of suspension of GST registration will be effective from the date the suspension has come into effect.