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Cancellation of GST Registration & How to Reactivate GST

Updated on: 27 May, 2024 05:59 PM

While it is mandatory to get registered under the GST Act for people having an annual turnover exceeding Rs.20 lakhs, individuals can also cancel their GST registration for various reasons, like the closure of business, non-applicability, or an order issued by the tax officer. In this article, we will cover the reasons for and process of cancellation of GST registration and the revocation of GST cancellation.

What is the Cancellation of GST Registration?

Cancellation of GST registration implies or means that the taxpayer will not be registered under GST anymore. He/she will not be required to pay or collect GST anymore. In the case of cancellation of GST registration, the individual is also not required to file GST returns or claim input tax credit.

What are the Consequences of GST Registration Cancellation?

Given below are the consequences of the cancellation of GST registration -

  • The taxpayer will not be required to pay GST after cancellation
  • For certain businesses, it is mandatory to register under GST. In case the GST registration is already canceled but the business still continues, it will be treated as a serious offense under GST and will attract heavy penalties.

How to Cancel GST Registration?

For Migrated Taxpayers

Every person who was registered under indirect taxes had to migrate to GST mandatorily. However, under GST, they were not actually required to obtain GST registration. For example, most states' VAT threshold was Rs.5 lakhs. However, the GST threshold is Rs.20 lakhs.

Given below are the steps to cancel GSTIN registration by migrated taxpayers through the GST portal -

  • Fill in the details of the authorized signatories and their places.
  • Finally, sign it using an EVC (for proprietorship and partnership firms) and DSC (for LLPs and companies).

Please note: This service can only be availed by those who have not issued tax invoices. If the taxpayer has issued a tax invoice, then he/she needs to file Form GST REG-16.

For other than Migrated Taxpayers

Reasons for Cancellation

Discontinuation of business

The business was fully transferred, amalgamated, disposed of, or demerged. In this case, the transferor can cancel his registration if it ceases to exist.

If the constitution of the business changes.

Forms for Cancellation

Those who cannot cancel their registration through the above mode should file Form GST REG -16. The legal heirs of a deceased person can also follow the procedure mentioned below -

  • The application should be made in Form GST REG 16.
  • Fill in the details of inputs, semi-finished, and finished goods kept in stock on the date on which the cancellation of registration is applied.
  • Enter the details of payment and liability thereon.
  • The proper officer will issue a cancellation order, Form GST REG 19, within a period of 30 days from the date of application.

By Tax Officer

Reasons for Cancellation

  • If the business is not being conducted from the declared place of business
  • Issues invoices or bills without any actual supply of goods or services
  • Violates the provisions of anti-profiteering.
  • If a taxpayer has not filed GSTR-1 due to non-filing of GSTR-3B for 2 consecutive months
  • Violates section 16 of the act and avails input tax credit.
  • Using ITC from electronic ledger to discharge 99% of the tax liability in violation of Rule 86B.

Procedure for Cancellation

  • If the officer finds it proper to cancel the registration, he is required to send a show cause notice to such person in Form GST REG -17.
  • The taxpayer has to reply to the notice in Form GST REG -18 within 7 days from the date of issuing the notice specifying why his/her registration should not be canceled.
  • If the officer finds the reply satisfactory, the officer can drop the proceedings and pass an order of the same in Form GST REG 20.
  • If the officer decides to cancel the registration, then he/she has to issue an order in GST REG -19 within 30 days from the date of receiving the reply.

What is Meant by Revocation of Cancellation?

Revocation refers to the cancellation of a decision that was made earlier. The revocation of cancellation of registration means that the decision to cancel the registration has been reversed, and the registration will remain valid like before.

When is the Revocation of Cancellation Applicable?

The revocation of cancellation is applicable only in the case when the officer has canceled the individual’s registration on his own. Such a person can apply for the revocation of cancellation within 30 days from the date of receiving the order.

What is the Procedure for Revocation of Cancellation?

  • The registered person can submit an application for revoking the cancellation in Form GST REG-21 within 30 days of issuing the order for cancellation.
  • If the authorized officer is satisfied, they can reverse the registration cancellation through an order in GST REG-22 within 30 days of receiving the application. The reasons for revoking the cancellation must be documented.
  • The authorized officer has the authority to dismiss the revocation application with an order in GST REG-05, notifying the applicant accordingly. Before dismissal, a show-cause notice (GST REG–23) must be issued for the applicant to justify why the application should not be rejected. The applicant needs to respond using form GST REG-24 within 7 working days of receiving the notice.
  • The authorized officer will make a decision within 30 days of receiving the applicant's clarification in form GST REG-24.

The blog provides essential insights into the cancellation and reactivation of GST registration. It covers reasons for cancellation, consequences, and detailed cancellation steps for migrated and other taxpayers. It also talks about the revocation of cancellation, detailing the application process. Even though this article must have helped you gain insights into GST registration cancellation and activation, it can still be intimidating. So, the best idea is to get help from tax experts for any GST-related queries.

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CA Abhishek Soni
CA Abhishek Soni

Abhishek Soni is a Chartered Accountant by profession & entrepreneur by passion. He is the co-founder & CEO of Tax2win is amongst the top 25 emerging startups of Asia and authorized ERI by the Income Tax Department. In the past, he worked in EY and comes with wide industry experience from telecom, retail to manufacturing to entertainment where he has handled various national and international assignments.