A Guide: Suo Moto Cancellation of GST Registration

Bio

Shreyansh Singh, an IIT Kanpur alumnus, has eight years of experience in the finance industry. He has spent 5 years at American Express developing mid to long-term strategies for multiple markets including US, Europe and India. Shreyansh currently leads Growth and Strategy initiatives at Pice.

2 Sep 24
8 mins

Shreyansh Singh

08 Mins
02-09-24

One App for all Business Payments

Download Now One App for all Business Payments

Table of Contents

What Are the Pre-Conditions for Suo Moto Cancellation?
Suo Moto Cancellation of GST Registration by Proper Officer
Suo Moto Cancellation of GST Registration: Removal Order
What Is the Procedure for Suo Moto Cancellation of GST Registration?
How to Activate Cancelled Suo Moto GST Registration?
What Will Be the Effect of Suo Moto GST Registration Cancellation?
After Getting a Notice of Cancellation, What Choices Does the Taxpayer Have?
What Actions Are Permitted on the GST Portal After the Suspension of the GSTIN?
When Does the Suspension of the GST Take Effect?
Can Earlier Period Returns be Filed After a Suo Moto Cancellation of the GST Registration?
How Can the GSTIN's “Suspended to Active” Status be Changed?
Conclusion

Timely Compliance is Crucial: Avoid Suo Moto cancellation by ensuring timely GST registration, return filing, and tax payments.
Know Your Rights: Taxpayers have the right to respond to cancellation notices within 7 days and can appeal for revocation.
Effect of Cancellation: Post-cancellation, the ability to file returns, collect tax, and amend GST details is restricted.
Revocation Process: Suo Moto cancellation can be revoked if justifications are accepted by the authorities within the stipulated time.
Continuous Monitoring: Regularly monitor your GST status on the portal to prevent or address any suspension issues promptly.

Suo Moto cancellation of GST registration is a process which tax authorities initiate to revoke a business's Goods and Services Tax (GST) registration. This situation usually arises when the taxpayer is found to not be complying with GST regulations, such as filing timely returns.

Understanding the intricacies of Suo Moto cancellation is crucial for businesses operating under GST in India. In this blog, we will discuss the grounds for Suo Moto cancellation, the procedure to activate it and many more. Continue scrolling.

What Are the Pre-Conditions for Suo Moto Cancellation?

The pre-conditions for Suo Moto cancellation are:

If the taxpayer fails to apply for registration of GST within 3 months or 90 days from the date of appointment.
Suo moto cancellation can arise if active taxpayers fail to file GST returns for a continuous period of 6 months. This time frame, however, changes to 3 consecutive tax periods for composition taxpayers.
If GST registration was on grounds of fraud, suppression of information or by stating wrong facts.
If the taxpayer does not deposit interest, tax and penalties to the Government within 3 months.
Suo Moto's cancellation of GST registration is possible on account of transfer of business ownership or closure of business.
Wrongful availment or utilization of Input Tax Credit (ITC), or refund of tax.
Issuance of bill or invoice without any supply of goods or services in violation of the Act's provision.

Suo Moto Cancellation of GST Registration by Proper Officer

A tax officer can initiate the cancellation of your Suo Moto as per the GST Act. However, under Section 29(2) of the CGST Act, it is mandatory on his part to issue a show-cause notice, justifying the reasons for cancellation. Taxpayers will also receive a reasonable opportunity for clarification, which can either lead to final cancellation or revocation of the same. However, if the tax officer has already begun Suo Moto cancellation of a particular registration, you cannot apply for cancellation.

Must reads

Why is GST Important in the Online Gaming Industry?

16 Aug 24
13 mins

Actionable Claims in GST: Definition, Scope, and Tax Implications

10 Aug 24
12 mins

Suo Moto Cancellation of GST Registration: Removal Order

Taxpayers can apply for removal of the cancellation order within 30 days from the cancellation order’s service date.

In order to reply, visit the GST portal, and go to 'Services.' Click on 'Registration', and finally select the 'Application for Filing Clarifications' link.

If tax authorities are convinced by the reasons provided by the taxpayer, they are likely to restore the GST registration by revoking the cancellation order.

What Is the Procedure for Suo Moto Cancellation of GST Registration?

The procedure for Suo Moto cancellation of GST registration is:

?feature=shared

Issuance of Notice: A GST officer needs to issue a show-cause notice to taxpayers, listing reasons why their GST registration should be cancelled.
Response Period: Taxpayers, in return, need to respond to the notice within 7 days of issuance, explaining reasons for their non-compliance or why the registration should not be cancelled.
Order of Cancellation: Authorities have the right to issue an order cancelling registration, if taxpayers fail to provide valid reasons or respond within the stipulated time.

How to Activate Cancelled Suo Moto GST Registration?

Follow the steps below to activate the cancelled Suo Moto GST registration:

Step 1: Visit the GST portal and log in to it using your credentials.
Step 2: Go to the 'Services' option and under 'Registration', click on Application for Revocation of Cancelled Registration option.
Step 3: Proceed to fill out the application for cancellation with the necessary details. Attach documents, as per requirement.
Step 4: Review the details that you have entered and submit the same for revocation.
Step 5: Tax officers will review your application within 30 days, and if they are satisfied with your justification, they will issue an order of revocation in Form GST REG-22.
Step 6: If cancellation is revoked, they will update your registration certificate and profile. Ensure to follow-up and check application status regularly, for any update.

Must reads

How to File GSTR 3B for GTA Service Provider in India?

23 Aug 24
13 mins

GST Return: What Is GST Return, Who Should File, Due Dates & Types of GST Returns

29 Aug 24
16 mins

What Will Be the Effect of Suo Moto GST Registration Cancellation?

The effects of Suo Moto GST Registration Cancellation are:

After the cancellation of GST registration, the taxpayers will not be able to file GST returns or pay or collect tax.
The status of the Goods and Services Identification Number will change from ‘Proceeding to Cancellation Initiated’ to ‘Inactive.’
The taxpayer will not be able to change details after the issuance of the cancellation order. However, change of contact details, phone number and email address are possible, until the payment of liabilities.

After Getting a Notice of Cancellation, What Choices Does the Taxpayer Have?

After getting a notice of cancellation order, the taxpayer has a fixed time frame or a Statutory Time Frame (STN) of 7 days to provide valid reasons to the authorities.

If the taxpayer can convince the authorities with proper justifications, the following will be the results:

The ‘Suspended’ status of GSTIN will change to ‘Active.’
The cancellation proceedings of the registration will be stopped.
The taxpayer will receive an update about the termination of the proceedings through SMS & Email.

What Actions Are Permitted on the GST Portal After the Suspension of the GSTIN?

As long as the status on the GST Portal displays 'Suspended', the taxpayers have the allowance to perform certain actions. For example, filing for returns, responding to notices, and filing appeals, etc.

After the suspension of registration, the taxpayers will have the right to file returns and upload the receipts only for the period before the suspension of registration. In addition to this, he can update contact details until the clearance of refunds. However, he will not possess the right to file a core amendment till the suspense of registration.

Must reads

Know Advertisement GST Rate and Compliance Details

12 Aug 24
18 mins

How to Change Address in GST Portal: Follow This Step-by-Step Guide

17 Sep 24
7 mins

When Does the Suspension of the GST Take Effect?

The suspension of Goods and Services Tax takes effect either from the day the taxable person applies for the cancellation of registration or the date of the cancellation request, whichever is later.

Can Earlier Period Returns be Filed After a Suo Moto Cancellation of the GST Registration?

Registered taxpayers can file returns for the previous period of the date specified in the cancellation order after Suo Moto cancellation of your GST registration. However, the GST Practitioner (GSTP) will not carry out the required duties after the cancellation order. Moreover, you will lose the right to file returns or upload invoices after the date of cancellation.

How Can the GSTIN's “Suspended to Active” Status be Changed?

You would need to ensure the filing of all due returns and there are no pending dues. After that, in the cases where the cancellation of GSTIN was for non-filing of returns/ statements, the status will likely be automatically changed from 'Suspended' to 'Active' on the portal.

Must reads

A Comprehensive Guide on Input Tax Credit 04 Filing

28 Aug 24
9 mins

Understanding the GST Composition Scheme

11 Aug 24
11 mins

Conclusion

Being aware of the reasons behind Suo Moto cancellation of GST registration, knowledge of the activation process and promptly making responses minimises the risk of businesses losing registration. It is advisable to file returns and pay pending dues on time to ensure legal compliance and streamlined business operations under the GST regime.

💡If you want to pay your GST with Credit Card, then download Pice Business Payment App. Pice is the one stop app for paying all your business expenses.

FAQs

What is Suo Moto cancellation of GST registration?

Suo Moto cancellation refers to the process where GST authorities initiate the cancellation of a taxpayer's registration due to non-compliance with GST laws, such as failure to file returns or fraudulent activities. The cancellation is initiated without the taxpayer’s request, and the taxpayer is issued a show-cause notice to respond within a specific timeframe.

What are the common reasons for Suo Moto cancellation of GST registration?

Common reasons include failure to file GST returns for six consecutive months (three tax periods for composition taxpayers), non-payment of tax, interest, or penalties within three months, fraudulent registration, wrongful ITC claims, and issuing invoices without supplying goods or services.

How can a taxpayer revoke Suo Moto cancellation of their GST registration?

To revoke the cancellation, the taxpayer must log in to the GST portal, submit an application for revocation within 30 days of the cancellation order, and provide a valid explanation. If the authorities are satisfied with the justification, the registration may be reinstated.

What happens if the Suo Moto cancellation of GST registration is not revoked?

If the cancellation is not revoked, the taxpayer loses the ability to file GST returns, collect or pay GST, and make changes to the GST registration details. The GSTIN status will change to 'Inactive,' affecting business operations and compliance under GST laws.

Can a taxpayer file returns for the period before the Suo Moto cancellation?

Yes, the taxpayer can file returns for the period before the cancellation date. However, they cannot file returns or upload invoices for any period after the cancellation has taken effect, which can impact their business compliance and financial records.