Cancellation of GST registration defines that the taxpayer will not be a GST registered individual anymore; they will not have to pay or collect the tax. Taxpayers who have earlier registered under the GST Act can apply for cancellation of GST registration any time they intend to close their business or if any other situation emerges. After the registration is cancelled,the taxpayer is no longer required to pay tax or collect tax from ordinary people.
Consequences of cancellation
The taxpayer cannot collect and could not pay GST anymore
There will be no need for furnishing any GST return by the taxpayer.
For individual businesses, registration under GST is compulsory. If the GST registration is cancelled and business is still continued, it will mean an offence under GST and heavy penance will apply.
The registration granted under GST gets cancelled for specified reasons. The cancellation can either initiated by the department or the registered person or the legal heirs in case of a registered person’s death. In case the registration has cancelled by the department there is a provision for revocation of the registration cancellation.
Cancellation of GST registration can be made by:
Requested by the taxpayer
Migrated taxpayers
Every person who has registered under erstwhile indirect tax laws had to migrate to GST mandatorily. For example, most states’ VAT threshold was 5 lakhs, when, in fact, it is 20 lakh for GST.
However, make sure you are not making inter-state supplies since registration is compulsory for inter-state suppliers except for service providers.
The application for cancellation, in case of voluntary registrations made under GST, promptly could have been made only after one year from the date of registration, for example, Rs. 40 lakh or Rs. 10 lakh in certain states/ union territories.
Such taxpayers had to submit an application electronically in FORM GST REG-29 at the GST portal.
Other than the migrated taxpayers
The business has discontinued.
The business has transferred fully, amalgamated, demerged or disposed to of.
The transferee has to get registered; the transferor will cancel its registration if it ceases to exist.
Change in the business example constitution example; a private limited company has changed to a public limited company.
Tax officer A tax officer can cancel the registration if:
The taxpayer does not perform any business from the declared place of business.
Taxpayer issues invoice or bill without the supply of goods/services.
They are violating the anti-profiteering provisions.
Utilization of ITC from electronic credit ledger to discharge more than 99% of the tax liability for specified taxpayers with the total tax value of supplies considerable Rs. 50 lakh in the month, with some deviations.
A taxpayer has not filed GSTR-1 due to GSTR-3B not being filed for more than two consecutive months.
Legal heirs of taxpayer
Before the cancellation of registration, the officer would notice a person whose GST registration is liable to be cancelled.
Attested notice within seven working days from the date of service of such information as to why the GST registration is cancelled.
The registered person can reply to the attested notice within the prescribed time, or the GST registration can stand cancelled.
Revocation for cancellation of GST Revocation of cancellation of registration defines that the registration process has reversed and the registration is still valid. It is applicable only when the tax officer has cancelled by a taxable person’s registration on his/her motion. Such a taxable person can apply to the officer for revocation of GST cancellation within thirty days from the cancellation order date.
However, the revocation application cannot be filed if the registration has cancelledfor failure to file the return. Such returns must be furnished first and payment of all dues amounts of tax, interest and penalty.
At AJSH, we assist our clients in dealing with various GST matters (GST registration, filing of GST returns, claiming refund & GST audits) by providing them adequate support and guidance from our end. If you have any questions or would like to know more about GST registration cancellation, kindly contact us.
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