written by Khatabook | August 4, 2021

Cancellation of registration under GST- Why & How?

  

Goods and Service Tax or GST was implemented on 1st July 2017 to ease doing business and granting more tax benefits to the people. With the new indirect tax regime change, the government has focused on making the system automated by reducing manual intervention and aiding in a speedy process. Therefore, there are multiple benefits of GST. One such automated process is the cancellation of the GST Registration number. Let’s look into the details about why the GST cancellation process is required and how to apply for the same.

What is the cancellation of registration?

Cancellation of GST registration happens when a person does not require such registration because of business discontinuation. Or it can be for other reasons which were not followed in respect to office orders. This is done by making an application in the GST cancellation form. Some of the cases where GST cancellation is required are as follows:

1. In case business is discontinued-

a. Transferred fully for any reason, including the death of the proprietor

b. Amalgamation with other legal entity

c. Demerged or disposed of

d. Change in the constitution of business

e. A taxable person who is no longer liable to be registered

2. Where proper officer cancels registration on his own-

a. When the person does not conduct business from his place of business

b. Issues invoices without the supply of goods or service

c. Violates the provisions of anti-profiteering

d. Has not filed returns for 6 months

e. The composition person has not filed returns for periods

f. Business is not commenced within 6 months of registration

g. Registration was done by fraud or not according to the provisions of law

h. ITC is utilised more than 99% from electronic credit ledger where the taxable value exceeds Rs 50 lakhs in a month in certain cases

i. GSTR 1 was not filed because GSTR 3B was not filed for the past two months or one quarter for those opting for the QRMP scheme.

j. When a person has not availed GST credit as per law.

Consequences of GST registration cancellation

When the GST number is cancelled, the taxpayer will not be required to pay GST and you will also be unable to claim GST credit.

For certain categories of businesses, GST registration is compulsory. If they cancel GST registration and continue with their business, an offence and penalties will be charged.

Also Read: How To Calculate Aggregate Turnover For GST Registration

Who can cancel GST registration?

  • The taxpayer can cancel GST registration on his own by following the GST cancellation procedure. This is called suo moto cancellation. 
  • The relevant officer can also cancel GST registration if he finds any faults. 
  • It can also be cancelled by the legal heir of a person in case of death.

Procedure for GST cancellation of GST Registration

 We have seen who can cancel GST registration, the consequences of cancellation, etc. Now let us look at the steps on how to cancel GST registration. 

Cancellation by Taxpayer in Form GST REG 16

Step 1: Visit GST portal- www.gst.gov.in/

Step 2: Click on 'login' to get access to your username and password.

Step 3: Enter your username and password to log in.

Step 4: Under the Services tab in Registration, click on 'Application for Cancellation of Registration.'

Step 5: Three tabs are visible- basic details, cancellation details and verification. Click each of them and enter details.

Step 6: Check basic details and address of Principal Place of Business. They are pre-filled.

 

Step 7: In ‘Address for Future Correspondence’, add details, or you can check the box if it is the same as ‘Address of Principal Place of Business.

Step 8: Select the ‘Save and Continue’ button, following which a blue tick will appear confirming the completion of Basic details.

Step 9: The tab of ‘Cancellation details’ will get activated.

Step 10: Select the 'reason for Cancellation' from the drop-down list provided.

For each drop-down option, there are different tabs available. 

Let us check their process:

1. Change in the constitution of business leading to change in PAN

When this option is selected, you are required to enter certain details-

a. Date from which registration is to be cancelled- This is a mandatory field. You have to enter the date from which you want your GST registration cancelled.

b. Details for Transfer, Merger or Change in Constitution- You have to enter the GSTIN (tax registration number) of the entity where your business is transferred, merged or changed. Once you’ve entered the GSTIN, the portal will capture the name of the other business. 

Proceed after clicking on ‘Save & Continue.'

2. Ceased to be liable to pay tax

When this option is selected, you are required to enter certain details-

a. Date from which registration is to be cancelled- This is a mandatory field. You have to enter the date from which you want your GST registration cancelled.

b. Tax payable on stock- 

  • You have to enter the value of stocks as inputs, semi-finished and finished goods and the corresponding tax liability. 
  • Based on this information, you are required to enter the value to offset the liability from electronic cash ledger, electronic credit ledger or both.
  • Once you submit this form, the portal will automatically deduct amounts from Electronic Cash Ledger, Electronic Credit Ledger or both by debiting these accounts.
  • Proceed after clicking on ‘Save & Continue.'

Also Read: A Step-by-Step Guide to GST Registration Procedure in India

3. Discontinuance of business/Closure of business

When this option is selected, you are required to enter certain details-

a. Date from which registration is to be cancelled- This is a mandatory field. You have to enter the date from which you want your GST registration cancelled.

b. Tax payable on stock- 

  • You have to enter the value of stocks as inputs, semi-finished and finished goods and the corresponding tax liability. 
  • Based on this information, you are required to enter the value to offset the liability from electronic cash ledger, electronic credit ledger or both.
  • Once you submit this form, the portal will automatically deduct amounts from Electronic Cash Ledger, Electronic Credit Ledger or both by debiting these accounts.
  • Proceed after clicking on ‘Save & Continue.’

4. Others

When this option is selected, you are required to enter certain details-

a. Others (Please specify)- You have to mention the reason for the cancellation of GST registration.

b. Date from which registration is to be cancelled- This is a mandatory field. You have to enter the date from which you want your GST registration cancelled.

c. Tax payable on stock- 

  • You have to enter the value of stocks as inputs, semi-finished and finished goods and the corresponding tax liability. 
  • Based on this information, you are required to enter the value to offset the liability from electronic cash ledger, electronic credit ledger or both.
  • Once you submit this form, the portal will automatically deduct amounts from Electronic Cash Ledger, Electronic Credit Ledger or both by debiting these accounts.

Proceed after clicking on ‘Save & Continue.’

5. Transfer of business on account of amalgamation, de-merger, sale, leased or otherwise.

When this option is selected, you are required to enter certain details-

a. Date from which registration is to be cancelled- This is a mandatory field. You have to enter the date from which you want your GST registration cancelled.

b. Details for Transfer, Merger or Change in Constitution- You have to enter the GSTIN of the entity where your business is transferred, merged or changed. Once you’ve entered the GSTIN, the portal will capture the name of the other business. 

Proceed after clicking on ‘Save & Continue.’

Step 11: After filling in the details and submitting, the next tab, ‘Verification tab,’ will activate.

Step 12: You have to select the 'Verification check box', which states that all the details provided are true and correct to the best of your knowledge.

Step 13: Select the name of Authorised Signatory from the drop-down box and Place.

Step 14: Sign the application for cancellation of GST registration either by Digital Signature Certificate (DSC) or EVC option. 

In the case of the DSC option, emSigner will pop up and proceed further.

In the case of the EVC option, an OTP will be received on your registered mobile number and email ID. 

Step 15: On successful completion, you will receive an Acknowledgement Receipt Number (ARN) with a confirmation message. A similar message will also be sent on the registered mobile no. and email ID.

Step 16: The tax authorities will check the application and proceed accordingly.

Track Application Status

After the GST cancellation process, you are required to check your cancellation status. You can check this with the ARN generated when the application of registration cancellation was filed as per Step 15 above.

Step 16: Under the ‘Services’ tab, in Registration, click on ‘Track Application Status.'

Step 17: You can either select ARN or Submission Period.

In case you select ARN, mention ARN and click ‘Search.’

In case you select ‘Submission Period,’ mention ‘From’ and ‘To’ dates and click ‘Search.’

You will be able to see the status of your application. 

Officer may not accept the application

GST Officer may not accept the application if:

  1. The application is found incomplete
  2. In case of transfer, merger or amalgamation, the new entity has not been registered.

The officer provides information to the applicant for responding within seven days or else the application would get rejected. The officer has to state the reasons for the rejection of such an application.

Final Return

 After cancellation of GST registration, every person is required to file a final return in Form GST 10. This has to be filed within 3 months from the date of cancellation of the order of cancellation by the Proper Officer, whichever is later. 

In the case of Form, GST 10 is not filed by the person, then a notice in Form GSTR 3A is issued to the person asking him to file the same in 15 days. However, if it is not filed in 15 days, then necessary action will be taken by the GST officer.

If the person filed the return in 30 days, the order will be withdrawn and will be liable for late fees and interest.

Cancellation by GST Officer in Form GST REG 17

 We have seen how to cancel the GST registration by the taxpayer. Now let us look at cancellation by an officer. 

  1. If the GST officer has reasons for cancellation of registration, they will send a show-cause notice to the person in FORM GST REG 17.
  2. The person is required to reply in FORM GST REG 18 in the next 7 days stating why his registration should not get cancelled.
  3. If the officer is satisfied with his reply, they will pass an order in FORM GST REG 20 and stop the proceeding.
  4. If the officer thinks that GST registration should be cancelled, they will issue a GST REG 19 in 30 days.

 So we have seen how to cancel GST registration India by taxpayer or officer. 

Revocation of cancellation of registration

This means that the decision of cancellation has been removed, and registration will be active again. When the officer cancels the registration, the person can apply for revocation in 30 days with reasons for revocation of cancellation. Let us look at how to activate cancelled GST registration:

  1. Submit an application to the officer in GST REG 21 if the officer has cancelled registration on his own. This has to be submitted in 30 days.
  2. If the officer is satisfied, he can revoke the cancellation in FORM REG 22 in 30 days with reasons in writing.
  3. Officer can also reject the application in GST REG 05. However, before such rejection, he has to issue a show-cause notice in GST REG 23 asking the person for reasons of cancellation of registration. The person will reply in GST REG 24 in 7 days.
  4. Officer will decide in 30 days in GST REG 24.

Also Read: Latest GST News, Information, Notifications & Announcements

Conclusion

GST being a dynamic act, the government is constantly making changes for its better functioning. Thus, considering the growth of technology, the government has made GST registration cancellation online for transparency and easy use. All efforts are being made to ensure that people are comfortable following all the processes with minimal manual intervention. GST cancellation is one of them and can be done easily with the procedure mentioned above.

Frequently asked Questions

1. How can I check my GST cancellation status?

You can check GST cancellation status under the ‘Services’ tab; in Registration, click on ‘Track Application Status.’

2. Are there any charges for the GST cancellation process?

There are no such charges. If the person still carries out business after surrendering the GST registration, it will be an offence and heavy penalties will be charged.

3. How can I reply to the GST cancellation notice?

All GST submissions are to be done online on GST Portal. It is to be submitted with DSC or EVC option.

4. Can I appeal against the cancellation of GST registration?

You can appeal by uploading the annexure in GST APL-01 with other documents.

5. What is the penalty for not filing GST REG 10 on time?

Rs. 200 per day till the date of actual payment.

6. How to activate cancelled GST registration?

You can activate your cancelled GST registration by applying for revocation, as discussed above.

7. How to close GST account?

GST registration can be cancelled for specific cases:

  • In case business is discontinued 
  • Where proper officer cancels registration on his own.
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