What to Do If GST Registration Is Cancelled Via Suo Moto? 

Cancelling GST registration via Suo Moto or an owner's own accord can be a challenging experience for any business. If an authorized officer initiates the cancellation, it should be for non-compliance with GST regulations, such as failing to pay taxes on time or failing to file returns.

However, revocation of GST cancellation is possible. In this blog, we will guide you through what to do if GST registration is cancelled, the detailed cancellation steps and other requisites. 

What Is the Cancellation of GST Registration?

Cancellation of registration means terminating a taxpayer's GST registration certificate. After this, the person will not be required to comply with the regulations of GST, file returns or pay/collect tax.

This can be initiated by the taxpayer, by the tax authorities (Suo Moto) or due to specific conditions such as non-compliance. Section 29 of the CGST Act and CGST Rules 22-22 cover GST registration cancellation in detail.

What Are the Consequences of GST Registration Cancellation?

Let us discuss the 3 consequences of GST registration cancellation:

• Ineligible for GST Registration Cancellation

You cannot claim Input Tax Credit (ITC) on purchases after cancelling your GST registration. In addition to this, the taxable person would be required to pay an equivalent amount as ITC on stock-held goods, capital goods and input or input services on the immediate day after the cancellation date.

• Maintaining Records

It is mandatory for businesses to maintain records, financial documents and accounts for a period of 6 years after GST cancellation. This is crucial for audits in future.

• Legal Complications

It is necessary that a business comply with the provisions of GST after cancellation. For instance, filing of final GST returns on time. Otherwise, non-compliance can lead to legal complications by the authorities.

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Reasons for Suo Moto Cancellation of GST Registration Via Authorities

Tax authorities can cancel your GST registration under the following 8 circumstances:

• Supplies that have been made without any invoice issue with a motive to evade paying tax. This is treated as a violation of the Act and can lead to registration cancellation.
• Registration can be cancelled on account of the death of the sole proprietor.
• Your GST registration can also be cancelled if you are winding up or shutting down your business.
• If you have tax liabilities or fail to pay interest to the State/Central Government for 3 months from the day the payment was due, the authorities likely initiate the cancellation of your GST registration.
• If there has been a discontinuation of business or closure of business then that is likely to lead to GST registration cancellation. 
• If a regular taxpayer is not registered under the composition scheme but has not filed returns for a consecutive period of 6 months then the authorities will be liable to cancel your GST registration
• If you do not run the business from the registered location or issue bills and invoices without any actual supply that is a violation of GST provisions. 

Removal Order for Suo Moto Cancellation of GST Registration

When the tax authorities decide to cancel GST registration via Suo Moto, they issue a show-cause notice to the GST-registered individual. This notice consists of the reasons for cancellation. It also provides an opportunity for the taxpayer to respond and defend his cause. If the taxpayer fails to respond or provide a satisfactory explanation, the authorities will issue an order of cancellation.

Cancellation of GST Registration via Officer

Tax officers can issue Form GST REG-16 to cancel the GST registration of a business under the following conditions:

• Taxpayer Wishes to Cancel the GST Registration: One of the conditions is when a taxable person issues Form GST REG -16 and requests for cancellation of GST registration. The concerned officer will go through the request and if it seems justified, the request will be approved by issuance of Form REG-19 as approval of the request.
• Tax Officer Cancels the GST Registration: If a taxable person does not abide by the GST regulations, the tax officer will issue a Form REG-18. It is a notice that details the grounds which can lead to the cancellation of GST registration, providing an opportunity for the taxpayer to explain. If the reasons seem unjustified to the officer, he/she can issue a Form GST REG -19 and proceed with the cancellation.

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Steps to Activate Suo Moto GST Registration

Follow the below procedure to activate a cancelled Suo Moto GST Registration:

Step 1: Visit the official GST portal.

Step 2: Enter your registered credentials to log in.

Step 3: Navigate the dashboard and select the ‘Services’ option.

Step 4: Click on ‘Registration’ followed by ‘Application for Revocation of Cancelled Registration.’

Step 5: Provide a valid reason for revocation and upload all the required documents.

Step 6: Click on ‘Submit’ to apply for revocation.

Step 7: The proper officer can approve or withdraw the application for cancellation within 30 days of receiving it.

Step 8: If the GST officer issues an order in Form GST REG-22, then the taxpayer will receive all the accesses. In addition to this, the GST registration certificate and account will also be updated.

What Is Meant by Revocation of Cancellation?

Revocation of cancellation refers to the process of reinstating a GST registration that was previously cancelled by the authorities. This ensures the validity of the registration and allows taxpayers to resume the operations of their business under the GST regime. The taxable person can visit and apply for revocation on the GST portal. 

When Is the Revocation of Cancellation Applicable?

The revocation of cancellation is applicable in the following cases:

• Cancelled by the Tax Officer: Reversal of cancellation is applicable when not the taxpayer but the tax officer has initiated the procedure for cancellation. The taxpayer can apply to revoke the GST registration cancellation within 30 days from the issuance of the cancellation order.
• Cancellation by Mistake: You can apply for revocation of GST cancellation if it was on the grounds of any misunderstanding or error.
• Rectification of Non-Compliance: If the taxpayer rectifies the issues of non-compliance that led to the cancellation of registration, it can be revoked.

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What Is the Procedure for Revocation of Cancellation?

The procedure for revocation of cancellation has been discussed below, in detail:

• Apply using Form GST REG-21, within 30 days from the issuance of the cancellation order by the tax officer.
• Upon acceptance, the officer will revoke the cancellation in Form GST REG-22 within 30 days from receipt of your application.
• However, the officer also has the right to reject your application within the same period in Form GST REG-05.
• Before rejection, the tax officer must issue a show-cause notice in Form GST REG-23 detailing the cause of the same. Taxpayers should reply in Form GST REG-24 within 30 days from the issuance of the notice.
• The tax officer will provide their decision within 30 days from the date of receipt of clarification in Form REG-24.

Conclusion

As a business owner, you might find it necessary to cancel your GST registration, whether the GST rules no longer apply to your operations, you are shutting down the operations or a tax officer insists on it. By understanding and adhering to GST cancellation guidelines, you can avoid unnecessary complications and prevent potential legal issues.

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