GST Registrations Cancellation

GST is the biggest tax reform India has seen since independence. With our country still running on pre-independence laws, this is the first big step towards legal reforms. GST came into effect from 1st July, 2017 onwards and has subsumed all types of indirect taxes. Now taxpayers only have to pay one tax instead of numerous others. In other way today we learn here how GST Registrations Cancellation , and this process. 

Every taxpayer registered under any of the previous indirect taxes like, CST, VAT, excise, service tax, customs etc. must mandatorily get registered with GST and obtain unique registration number. Every other person, natural or juristic, having an annual turnover of ₹20 lacs or more (in some cases ₹10 lacs) must get registered as well. However, GST registration can be cancelled as well .

Who can initiate cancellation of GST registration?

GST registration can be cancelled either by an appropriate authority, that is, officer or the taxpayer himself or his legal heirs upon his death. However, in case of voluntary cancellation the process will be initiated only if 1 year has elapsed since the date of allotment of registration certificate.

The application for voluntary cancellation of GST registration is made in Form GST REG-16. In case of cancellation by authorities Form GST REG-17 is used to send a show-cause notice to the taxpayer. The final order for cancellation is passed by Authorities in Form GST REG-20.

When can GST registration be cancelled?

GST registration of a business can be discontinued in the following cases:

• When business has been discontinued
• The registered entity has violated the provisions of GST
• The entity has been amalgamated or merged into another entity
• There has been a change in the entity's constitution
• The taxpayer is no longer required to get mandatory registration done under GST due to subsequent increase in threshold limit
• The taxpayer availing composition scheme hasn't filed returns for the last three consecutive quarters of a financial year
• The taxpayer hasn't filed returns for the last six months
• The applicant hasn't commenced his business since six months from the date of registration
• The entity has received registration using fraudulent means

The registration can either be cancelled from prospective or from retrospective effect. In case of cancellation from authorities the applicant will be sent a show cause notice. He will be given the opportunity to represent himself. Notice won't be sent in case legal heirs of the taxpayer file cancellation request.

What is the tax liability upon cancellation?

Cancellation of registration either by authorities or voluntarily by the applicant doesn't amount to non-payment of existing tax liability. A taxpayer whose registration is cancelled must remit his liability either by

• reversing his input tax credit he has received on inputs or on stock held on the day preceding the date of cancellation; or
• remitting the output tax

whichever is higher.

In case of capital goods, the tax liability is the higher of:

• Input tax credit on the capital goods reduced by some percentage; or
• actual tax on the value of capital goods

Only upon payment of tax liability is a person granted NOC and his registration is deemed cancelled. 

How can the cancellation be revoked?

Revocation of GST Registrations Cancellation order is possible only in case of cancellation by an appropriate authority. The cancellation cannot be revoked if it has been done voluntarily by the taxpayer. The application for revocation of the order must be submitted by the taxpayer within 30 days from the date on the order. In case the officer rejects the application, then the applicant will be given the opportunity of being heard and make representation.

These are the provisions of cancellation of GST registration.

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