If anyone wants to cancel the GST registration because Goods and Services Tax does not apply or the person is shutting down a profession or business, or the tax authority calls for cancellation, this blog will guide why the cancellation of GST registration happens and the procedure of Revocation of Cancellation of GST Registration.
Reasons why a taxpayer wants to cancel the registration?
The taxpayers business has been terminated.
The taxpayers business has been transferred completely, merged, demerged or disposed of —the transferee (or the new corporation from merger/ demerger) has to obtain registration. The transferor has to cancel its registration if it wants to exist.
There is an amendment in the foundation of the business (For example- Pvt. Ltd. company has changed to a Public Ltd. company)
Forms for cancellation
The taxpayer seeking for cancellation of GST has to file an application in FORM GST REG 16. The legal inheritor of a deceased taxpayer also has to follow the same process as mentioned below.
Application for cancellation of GST must be made in FORM GST REG 16.
The following details should be included in cancellation FORM GST REG 16-
Details regarding inputs, finished goods, semi-finished held in stock on the date on which cancellation of GST registration is applied.
Details of the payment
Liability thereon
The appropriate officer will issue an order for cancellation of GST in FORM GST REG-19 within a time period of 30 days from the date which the was the application submitted. The cancellation of GST will be effective from a date stated by the officer and the officer will notify the taxpayer.
Why will the GST officer cancel GST Registration?
GST registration can be cancelled for the following reasons-
If the taxpayer fails to conduct any business activity from the registered place of business,
If the taxpayer issues a bill or invoice without the supply of goods or services (i.e., in violation of the provisions of the Act),
If the taxpayer violates the anti-profiteering necessities (for instance, not passing on the benefit of ITC to clientele)
Below mentioned reasons are in effect from 1st of January 2021-
The utilisation of Input Tax Credit as of electronic credit ledger to clear more than 99% of the tax liability for particular taxpayers infringing Rule 86B – with the total taxable amount of supplies exceeding INR 50 lakhs in the month, with a few exceptions.
A taxpayer who failed to file GSTR-1 because GSTR-3B cannot be filed for two successive months
If the taxpayer avails of ITC in violation of the provisions stated under section 16 of the Act.
What is the Revocation of cancellation of GST?
Revocation is the official cancellation of a promise or decision. Revocation of cancellation of GST registration is the decision to reverse the cancellation of registration and to make the registration valid.
When revocation of cancellation of GST is applicable?
Revocation of cancellation of GST is applicable only when the tax authority has cancelled the registration of a taxpayer on his/her own motion. Such taxpayer can apply to the authority for revocation of cancellation within a time period of 30 days from the date of order of cancellation.
What is the Procedure for revocation of cancellation of GST?
Following is the process to for Revocation of Cancellation of GST Registration:
A registered taxpayer can submit an application for revocation of cancellation of registration, in FORM GST REG-21, if his/her registration has been cancelled suo moto by the concerned authority.
The taxpayer has to submit the application for revocation within a time frame of 30 days from the date of the cancellation order at the online Portal.
If the concerned authority is satisfied then they can revoke the cancellation of registration by passing an order in FORM GST REG-22 that too within a time frame of 30 days from the date of receiving the application. Appropriate reasons for revocation must be submitted in writing.
The concerned officer can reject the revocation application by passing an order in FORM GST REG-05 and communicate with the applicant for the same.
Before rejecting the revocation application, the concerned officer should issue a show-cause notice in the FORM GST REG–23 for the applicant entity to provide reasons why the revocation application not be rejected. The applicant entity has to reply in FORM GST REG-24 within the time frame of 7 working days from the date of receiving the notice.
The concerned officer will make a decision within a time frame of 30 days from the date of receiving clarification from the applicant entity in FORM GST REG-24.
Conclusion
The taxpayer seeking for cancellation of GST has to file an application in FORM GST REG 16. The legal inheritor of a deceased taxpayer can also file for revocation of cancellation of GST Registration. Revocation of cancellation is applicable only when the tax authority has cancelled the registration of a taxpayer on his/her own motion.