GST is a tax on event of supply and in the financial year, if supplier has an aggregate turnover above the threshold exemption of Rs.20 lakh /Rs.10 lakh (Special states), he is liable to register under GST. Also the GST law enlists compulsory registration to certain categories of suppliers and an option to voluntarily register for some, irrespective of their turnover. Once the Application has been submitted through GSTN Portal, the proper (authorised) officer would grant the Registration under GST.
Cancellation of Registration:
The provisions of cancellation of registration of all Registered Persons are prescribed in Section 29(1) of CGST Act 2017. The GST regulation provides for two scenarios where cancellation of registration can take place; the one when the taxable person no more requires it (voluntary cancellation), and another when the Proper Officer considers the registration liable for cancellation in view of certain specified defaults.
Cancellation of Registration by GST Officer:
Proper officer shall cancel the registration by giving the person an opportunity of being heard on the following grounds:
- Registered person has contravened provisions of the Act or the rules made thereunder as may be prescribed;
- Composition tax payer has not furnished returns for three consecutive tax periods;
- Normal tax payer has not furnished returns for a continuous period of six months;
- Person opted for voluntary registration has not commenced business within six months from the date of registration;
- Registration has been obtained by means of fraud, willful misstatement or suppression of facts.
Cancellation of Registration by Registered Person:
The registered person can opt for cancellation of registration for the following reasons:
- If the business of Registered Person has been discontinued.
- If the Registered business has been sold or transferred to some other entity, such other entity needs to register under GST.
- If the person or business is no longer liable for GST registration. (Migrated GST Persons can cancel registration if their supply is exempted or turnover is less than threshold exemption limit)
In case of voluntary registration (taken despite not being liable for), no cancellation is allowed until expiry of one year from the effective date of registration
Pending tax liability
The cancellation of GST registration shall not affect the liability of the person to pay tax or to discharge any obligation.
Every registered person whose registration is cancelled shall pay an amount, by way of debit in the electronic credit ledger or electronic cash ledger, equivalent to higher of
- the input credit in semi-furnished/furnished/raw stock of goods on the day before the date of cancellation (or);
- Actual amount of taxes on those goods
For capital goods, the registered person will have to pay the higher of the input credit back which was taken on these capital goods, reduced by a certain percentage or the tax applicable on the transaction value of goods.
Procedure for Cancellation of GST Registration
The taxable person desirous of cancellation of registration will apply on the common portal within 30 days of the event with data of stock held on the date and the quantum of dues of payments and credit reversal, and the particulars of payments made.
If satisfied, the Proper Officer shall cancel the registration within 30 days from the date of application or the date of reply to notice.
Forms for cancellation of GST Registration
Revocation of Cancellation
In case where registration is cancelled suo-motu by the Proper Officer, the taxable person can apply in Form GST REG 21 within 30 days of service of cancellation order, requesting the officer for revoking the cancellation ordered by him. However, before applying, the person has to make good the defaults (by filing all pending returns, making payment of all dues and so) for which the registration was cancelled by the officer.
If satisfied, the proper officer will revoke the cancellation earlier ordered by him in Form GST REG 22.