Cancellation of GST Registration

Cancellation of GST registration simply means that the taxpayer will not be a GST registered person anymore. He will not have to pay or collect GST or claim the input tax credit and accordingly, need not file GST returns.

Conditions, When a Taxpayer Can Cancel the GST registration?

• Discontinuance or closure of the business
• Taxable person ceases to be liable to pay tax
• Transfer of business on account of amalgamation, merger de-merger, sale, leased or otherwise
• Change in constitution of business leading to change in PAN
• Registered voluntarily but did not commence any business within specified time
• A taxable person not liable any longer to be registered under GST act

Forms required for Goods and Service Tax Cancellation/Termination

• For cancellation by a registered individual – Form GST REG 16
• For the issue of show cause notice for cancellation – Form GST REG 17
• For replying to a show-cause notice – Form GST REG 18
• For the purpose of an order for dissolution – Form GST REG 19
• To stop the cancellation proceedings – Form GST REG 20 
• To stay proceedings – Form GST REG 18
• To apply for revoking cancellation – Form GST REG 21
• For an order revoking the cancellation – Form GST REG 22

Common Reasons for Goods and Service Tax Cancellation

Section 29 of the CGST Act of 2017 lays down the rules and documents necessary to cancel your registration under the GST law. According to Section 29(1), the proper officer may cancel the registration at his discretion or based on an application filed by the registered person or his legal heirs in the following circumstances:

• If the business is being discontinued
• If there are significant changes in the PAN card
• If there is a change in the company’s constitution
• If the business was amalgamated with another legal entity, demerged, or otherwise disposed of
• If the company was transferred fully to someone else, including on the death of the proprietor
• If the annual turnover is less than the prescribed threshold

Please do keep in mind that, after amendment, even taxpayers who have voluntarily registered for GST, even if their turnover is less than the prescribed threshold, can cancel their registration within one year from registration. Moreover, if you are a tax deductor, tax collector, or taxpayer with an assigned UIN (Unique Identity Number), you cannot seek cancellation.

Cancellation by the tax officer

GST registration can be cancelled by the GST tax officer if the taxpayer

• Does not operate any business in the declared location of the business
• Even without the supply of goods/services, issues an invoice or a bill, in violation of the GST provisions
• Violates the anti-profiteering regulations, for instance, not passing on the benefit of ITC to customers

With effect from January 2021, GST registration can be cancelled under CGST Rule 21 at the discretion of the GST tax officer in the following cases:

• With few exceptions, when the taxpayer makes use of the ITC from the electronic credit ledger to discharge more than 99 % of the tax liability for specified taxpayers – where the total taxable value of supply exceeds over ?50 lakh in a month.
• When a taxpayer has not filed GSTR-1 because GSTR-3B has not been filed for more than two consecutive months (one quarter for those who opt into the QRMP scheme)
• When the taxpayer avails Input tax credit in contravention to the provisions of section 16 of the GST Act or any of the GST rules 

Pending Tax Liability

Pending tax liabilities and obligations have no bearing on the cancellation of your registration in any way. Such obligations can still be easily discharged. When you cancel your registration, you must pay a fee that is greater than:

• The input credit in the form of finished or raw goods stocked one day before the cancellation
• The output tax for the products, as mentioned above.

In terms of capital and machinery costs, an amount is to be paid that is higher than:

1. A reduced percentage of the input credit of capital goods.
2. Tax filed on the transaction value of the above-mentioned products.

GST Cancellation

If filed on time, revocation of GST registration is possible. If a proper officer has issued a cancellation order, you can use Form GST REG 21 to request that it be revoked. Furthermore, this form must be submitted within 30 days of requesting cancellation. Before applying for cancellation, you must clear all defaults and ensure that the application is error-free. Moreover, for GST cancellation, all pending returns must be filed and all outstanding debts must be paid in full. When an officer is satisfied that all the above-mentioned conditions are met he or she may issue Form GST REG 22 for the termination of GST Registration.

Final Return

Every individual whose registration has been revoked must file a final GST return on Form GSTR-10 within three months of the date of cancellation or the date of cancellation order, whichever is later. This is mandated to ensure that the taxpayer is discharged of any liabilities that might have arisen. It is also worth mentioning that this provision does not apply to input service distributors and non-resident taxpayers who are required to pay tax under sections 10, 51, or 52.

No GST matter should be dealt with lightly. The utmost care and diligence should be exercised while cancelling your GST registration: https://reg.gst.gov.in/registration/. Hence, it is recommended that you get a hold of one of our GST specialists today! Enjoy a hassle-free and trouble-free GST cancellation experience, only with S2S Biz Solutions Pvt Ltd.