A Guide: Suo Moto Cancellation of GST Registration

What are the Pre-conditions for Suo Moto Cancellation?

Suo moto cancellation proceedings can be initiated upon the fulfillment of any one of the below-mentioned conditions -

• If the business has been registered through fraud, misrepresentation, or suppression of facts.
• If the taxpayer fails to apply for GST enrolment within 90 days of the appointed date.
• If the taxpayer has not filed his returns for 6 months consecutively and for 3 consecutive months in the case of composition taxpayers.
• The taxpayer has supplied goods or services without issuing an invoice, thus violating the provisions of the CGST Act and evading taxes.
• If the taxpayer fails to deposit the tax collected with the treasury within 90 days.
• If the taxpayer fails to deposit, interest, tax, or penalties to the government within 90 days.
• If there is misconduct during the proceedings under the GST Act.
• If a person is not liable or ceases to be liable for deduction or collection of taxes.
• If the sole proprietor of a sole proprietorship business dies.
• In case of amalgamation, merger, demerger, and transfer of a business.
• Change in the constitution that leads to a change in PAN.
• If the business discontinues or closes.

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What is the Procedure for Suo Moto Cancellation of GST Registration?

• As per the GST law, the tax officer has to present a show-cause notice to the taxpayer and provide him/her with the opportunity to be heard. In response to the show-cause notice, the taxpayer has to explain the reason why the GST registration should not be canceled within 7 days of receiving the notice.
• If the tax officer is satisfied with the taxpayer’s response, he/she can drop the cancellation proceedings and intimate the same to the taxpayer through e-mail or SMS.
• If the taxpayer fails to respond to the notice within 7 days or the GST officer is not satisfied with the explanation, he/she can proceed with the suo moto cancellation of GST registration.

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How to Activate Cancelled Suo Moto GST Registration?

Given below are the steps that you need to follow to activate the cancellation of Suo Moto GST registration -

• Go to the GST portal
• Enter the login credentials in the GST portal.
• Click on ‘services’ on the dashboard. Then select registration > application for revocation of canceled registration option.
• Enter the reasons for revocation and attach the necessary documents.
• Select the authorized signatory and click on ‘submit’ to apply.
• If the GST officer is satisfied with the justification filed, he/she can withdraw the cancellation order.
• The GST officer shall do this within 30 days of receiving the application for revocation.
• After the GST officer signs an order in Form GST REG-22, the assessee will be considered an active assessee and all the accesses provided to the assessees will be enabled.
• The taxpayer’s profile and the registration certificate will also be updated.

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How to Avoid Suo Moto Cancellation of GST

Suo Moto cancellation of GST registration happens when the tax officer cancels your registration on their own due to certain reasons. Here's how you can avoid it:

File Your GST Returns Regularly:

• Non-filing of returns is a major reason for Suo Moto cancellation. If you're a regular taxpayer, ensure you file GSTR-1 and GSTR-3B monthly. Composition taxpayers should file GSTR-4 annually.
• Maintain accurate records of your sales and purchases to avoid errors in your returns.

Follow GST Laws and Regulations:

• Do not engage in activities that violate GST laws, such as issuing fake invoices, tax evasion, or fraudulent activities.
• Ensure accurate details are provided in your registration application. Any misleading information can lead to cancellation.

Respond to Notices and Communications:

• If you receive a show cause notice from the tax officer, respond to it promptly and provide all necessary clarifications and documents within the given time frame.
• Ignoring notices can lead to cancellation of your registration.

Maintain Accurate Records:

• Keep proper records of all your business transactions, including invoices, bills, and other relevant documents.

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What will be the Effect of Suo Moto GST Registration Cancellation?

• The status of GSTIN will change from ‘proceeding for cancellation initiated’ to ‘inactive’.
• Once the cancellation date is specified on the cancellation order, the taxpayer will not be able to file a return or issue invoices after that.
• After issuing the cancellation order, the taxpayer cannot change the registration details. However, details like mobile number and email can still be updated until the payment of debt or refund.

Understanding the intricacies of suo moto Cancellation of GST Registration is crucial for businesses to comply with the GST Act. The process involves a detailed procedure where the taxpayer has the opportunity to respond to a show-cause notice. The activation of canceled Suo Moto GST registration demands a systematic approach through the GST portal. The consequences of the cancellation are significant. Therefore, it is a good idea to seek help from professional tax experts. Book a tax expert now!

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