Definition of GST Cancellation
Registration for the Goods and Services Tax (GST) can be voluntarily cancelled if the firm is inactive or does not generate the required revenue. A GST officer may also cancel a business's GST registration if it is not in compliance with GST. Once a person or entity's GST registration is cancelled, they are no longer required to file GST returns or pay or collect GST.
Voluntary GST Cancellation
If a person or company having a GST registration desires to terminate their GST registration, they must submit Form GST REG-16 to the GST Department. If the GST Officer is satisfied after evaluating the application, he or she will issue an order to cancel GST registration on Form GST REG-19.
The following are some of the leading causes for termination of a voluntary GST registration:
• Discontinuation or liquidation of a business
• Business transfer, amalgamation, merger, de-merger, lease, or other relevant circumstances.
• Change in the organization's structure resulting in a new PAN.
• Annual revenue falls below the threshold for GST registration.
• The demise of the only owner
By voluntarily cancelling a GST registration, a business owner can avoid the burden of filing monthly GST returns and paying any applicable penalties or late-filing fees.
Revocation by a GST Officer
In accordance with the GST, an officer may begin the cancellation of a GST registration if the officer has justification to revoke the GST registration. The GST Cancellation by Officer process will commence with the issuance of a Form GST REG-17 Show Cause Notice.
If any of the following occur, a GST officer can initiate the cancellation procedure:
• If a taxpayer has continuously failed to file GST returns.
• The assessee voluntarily registered for GST but did not start a business within six months. • The registered taxpayer violated one or more sections of the GST Act or its Rules. • The assessee secured GST registration through deception or malicious misrepresentation.
• In order to evade tax or erroneously claim the input tax credit, a taxpayer provides goods or services without an invoice or generates an invoice in the absence of the provision of goods or services.
In the event of cancellation by a GST Officer, the Officer would notify the taxpayer whose GST registration is set to expire prior to cancellation. The taxpayer would then be afforded a reasonable opportunity to be heard prior to the cancellation of their GST registration.
The notice to the taxpayer from the GST Officer would be delivered on Form GST REG-17 with explicit reasons for the cancellation of the GST registration. The notice would also provide the taxpayer with an opportunity to respond and a hearing date, if one is established.
If the taxpayer answers to the notification and the appropriate authority is satisfied with the response, the case may be dismissed and Form GST REG-20 may be issued. If he is not satisfied, he may issue an order to terminate the GST registration using Form GST REG-19.
Cancellation Procedure for GST Registration
The GST e-services allow taxpayers to electronically cancel their GST registration. Before proceeding, the taxpayer must file all delinquent GST returns. If the GSTR-3B, GSTR-1, or GST annual return is not filed on time, the late return must be filed before the GST cancellation process may commence.
Step 1: Form GST REG-16 is used to apply for GST cancellation on the unified GST portal. The following information must be provided in the application for GST cancellation.
• Contact information, including a cell phone number and email address.
• Justification for cancellation
• The intended cancellation date
• Specifics on the value and tax owed on the stock of inputs, inputs available in semi-finished goods, inputs available in finished goods, and the stock of capital goods/plant and machinery.
• The taxpayer submits the details of their most recent GST return together with the ARN of that return.
Step 2: The GST Officer must assess the application and issue a cancellation order on Form GST REG-19 within 30 days of the date of the application. The cancellation will take effect at a date set by the Officer, and the taxable individual will be notified.
Consult a GST e-services GST Expert if you wish to revoke your GST registration. We will examine the status of your GST return filing, assist you with any outstanding GST filings, and file for GST cancellation.
Once submitted, we will additionally monitor your request to cancel your GST registration, respond to any questions, and assist you in finishing the process.
Final Return
The person or entity must submit a final GST return on Form GSTR-10 within three months of the date of cancellation or the date of the cancellation order, whichever comes first.
This is done to ensure that the taxpayer has no outstanding GST obligations. This clause is not applicable to distributors of input services or non-resident taxpayers who are required to pay tax under Sections 10, 51, or 52.
If the final GST return is not filed using Form GSTR-10, the taxpayer will receive a notification in Form GSTR-3A asking him or her to do so within 15 days.
If the taxpayer disregards the notification, procedures will be taken to assess the taxpayer's liability based on the available facts. If the return is submitted within 30 days of receiving the notice, the assessment order will be cancelled.
Getting Ready to Cancel Your GST Registration
Prior to initiating the GST cancellation process, the applicant must settle any outstanding GST obligations. In addition, the taxpayer must remit the greater of the input tax on the stock of inputs, semi-finished goods, finished goods, and capital goods or the output tax liability of such goods.
If the taxpayer's GST registration is cancelled, the input tax credit on current inventory must be refunded because the taxpayer will no longer be able to claim ITC.
The final GST payment can be made using an electronic credit or cash ledger. The final payment may be made concurrently with the filing of the final GSTR-10 form.
Rejection of cancellation request for GST
In some cases, the responsible Officer may decide to reject the application for the following reasons: • The submitted application is incomplete. • In the case of a business transfer, merger, or amalgamation, the new entity has not registered with the tax authority prior to submitting the application.
In such instances, the relevant Officer notifies the applicant in writing about the nature of the difference. The applicant must answer within seven days after the day the letter was received. If the applicant fails to do the same, he may deny the application after giving the applicant a chance to be heard.
Cancellation of GST Refund
Reversal of GST cancellation signifies that the cancellation decision has been reversed and the registration remains valid. This only applies when a tax official cancels the registration of a taxable person on his own initiative. A taxpayer may request revocation of the order within thirty days of obtaining the cancellation order. The following are the actions required to file for GST cancellation revocation:
If a registered person's registration has been revoked automatically by the appropriate Officer, a form GST REG-21 application for revocation of cancellation may be filed within 30 days of the cancellation order.
If the GST Officer is satisfied, he or she may revoke the cancellation of registration within 30 days of receiving the request by issuing an order on form GST REG-22. Revocation or cancellation of registration must be justified in writing.
In addition, the Officer may issue a form GST REG-05 order rejecting the application for revocation and advising the applicant. Before rejecting an application, the Officer must issue the applicant a GST REG–23 show-cause notice, requesting an explanation as to why the application should not be denied. The applicant must submit Form GST REG-24 within seven working days of receiving the notification. The appropriate officer will make a determination within 30 days of receiving the applicant's GST REG-24 clarification form.
Advantages of Voluntary Cancellation of GST
Upon gaining GST registration, if there is no subsequent commercial activity, the taxpayer must initiate the GST cancellation process. If a taxpayer ceases to file GST returns and allows his GST registration to lapse, he cannot reapply for GST registration using the same PAN.
In addition, if the government cancels a taxable person's GST registration, the taxable person must first apply for the cancellation to be revoked by paying any applicable late fees. After the reinstatement, cancel the GST or continue filing GST returns as appropriate.
Consequently, after receiving a GST registration, the taxpayer must monitor compliance. Therefore, if there is no commercial activity, submit a cancellation request for your GST registration as soon as possible.
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