Revocation of Cancellation of GST Registration

Business owners may need to reactivate a cancelled registration if it is involuntarily cancelled by tax officers. A GST registration helps a registered taxpayer claim Input Tax Credit (ITC) upon purchasing goods and services.

In this blog, you will discover the process for revocation of the cancellation of GST registration, along with the time frame for doing so and the potential consequences for businesses and taxpayers.

What Is GST Revocation?

A tax officer may cancel a taxpayer’s GST registration by commencing suo moto proceedings. In other words, the tax officer may cancel a registration involuntarily if he finds any non-compliance. However, if the taxpayer thinks that the GST registration should not be cancelled and that there are valid grounds for revocation, he can apply for revocation or restoration of the registration based on eligibility for GST revocation.

GST registration revocation helps a taxpayer operate his/her business without any hassle. It further allows businesses to create a positive image among multiple stakeholders, creating a positive reputation for compliance with tax norms.

Reasons for Cancellation of GST Registration

Cancellation can occur due to various common reasons, whether initiated by the taxpayer or by tax authorities. Below are some of the key reasons that may lead to the cancellation of GST registration.

• Turnover Below Threshold

When a taxpayer’s aggregate annual turnover is lower than the threshold limit of ₹40 lakh for goods or ₹20 lakh for services, he/she can apply for voluntary cancellation of GST registration. 

• Discontinuation of Business or Business Restructuring

When a taxpayer decides to discontinue their business activity or operation permanently by shutting down the business, he can opt for GST registration cancellation with voluntary application. The shutdown may be due to retirement, restructuring of business or any other reason for discontinuation. Business transfer to other owners can be another reason for discontinuation. 

• Conversion of Business

When there is a change in the constitution of a business or business structure, for instance, if a partnership or sole proprietorship changes into a private limited company, the GST registration has to be cancelled. The new entity should acquire a fresh GST registration from tax officials after the initial cancellation.

Thus, if there is a transfer of business, previous GST registration needs to be cancelled for regulatory requirements with timely submission of relevant documents and cancellation application. 

• Non-compliance

If the authorised tax officer finds non-compliance with GST regulations for a continuous period, he/she may cancel the GST registration for the taxpayer. Non-compliance may include non-filing of GST, non-maintenance of accounts, late filing of statutory returns or violations of GST provisions by regular taxpayers or any taxable person with tax liabilities.

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Form GST REG-21: Application for Reversal of Cancellation of GST Registration

If a taxpayer's GST registration certificate has been cancelled by the proper officer, the taxpayer can apply for reversal of the cancellation of the registration with an application in form GST REG-21. The taxpayer should file it within 30 days of receiving the cancellation notice.

However, if the proper officer cancelled GST registration due to non-filing of returns, then you have to file the returns along with interest and penalty before applying for reversal in form GST REG-21.

Here are the steps to file GST REG-21:

Step 1: Log in to the official GST portal and go to ‘Services’. Click on ‘Registration’ and navigate to ‘Application for Revocation of GST Registration Cancellation’.

Step 2: Fill in the necessary information and reasons for the reversal of cancellation of GST registration and upload the supporting documents. Then click on the verification checkbox and select the authorised signatory followed by the place.

Step 3: In the final step, apply for reversal with form GST REG-21 with a Digital Signature Certificate (DSC) or Electronic Verification Code (EVC). Application for revocation shall stand valid thereafter. You will then receive an acknowledgement, confirming the application submission. 

Form GST REG-23: Notice Cancellation of the Revocation Application

The application in Form GST REG-21 is reviewed by tax officers who are experienced professionals before the issue of cancellation order and cancellation procedure. If the officer finds the application unsatisfactory, they will issue a show-cause notice in Form GST REG-23 to the taxpayer. The taxpayer must then provide a detailed explanation why the application for revocation should not be rejected to prevent fresh application later.

The assessee will have to respond within 7 days of receiving the show-cause notice with form GST REG-24. If the concerned officer is satisfied with the reasons, he/she will issue an order for revocation of GST registration in form GST REG-22 within 30 days of receiving responses in form GST REG-21.

Form GST REG-24: Giving a Reply to a Show-Cause Notice Received in Form GST REG-23

In the case where a taxpayer receives notice in form GST REG-23, he/she should reply in application form GST REG-24 within 7 days from the date of receiving the notice, for GST revocation application. Form GST REG-24 includes the following information:

• Reference number and date of notice
• Application date and reference number
• GSTIN
• Reasons for the taxpayer’s revocation demand
• Documents to be attached

The authorised tax officer will verify the details furnished in form GST REG-24. If satisfied, he will issue a revocation order for GST registration in form GST REG-22 within 30 days from the date of receiving a reply in form GST REG-24.

If unsatisfied, the tax officer may reject the revocation request using form GST REG-05.

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What Is the Time Limit for Revocation of Cancelled GST Registration?

Here are the time limits for revocation of cancellation request for compliance services:

Revocation by the Taxpayer

If a taxpayer wishes to revoke GST registration voluntarily, he/she may apply for revocation within 30 days from the date when the revocation event occurred.

Revocation by Tax Authorities

In case the tax authorities or GST officer commence the revocation of GST registration due to non-compliance of a registered person or any other reason, they can issue the order of revocation within 30 days of initiating the revocation process.

Consequences of Revocation of Cancellation of GST Registration

There are several impacts on a business, pertaining to revocation of cancellation of registration. Some of these consequences are discussed below: 

1. Resumption of Regular Operations

GST registration cancellation results in adverse impacts on business operations even though a registered taxpayer does not need filing of GST returns after cancellation due to no further tax obligations for taxable supplies. However, its revocation helps businesses resume regular operations.

2. GST Compliance Obligations

As the cancellation proceedings are revoked, the business becomes obligated to comply with GST rules once again. The business will thus need to file returns once again after revocation of effective cancellation service. Completion of GST cancellation by revocation thus helps businesses operate seamlessly. 

3. Reinstatement of Business Image

Revocation of GST registration cancellation helps businesses recreate a positive image among customers, suppliers and other stakeholders as it denotes the commitment of the business towards complying with the tax regulations.

4. Seamless Business Transactions

GST cancellation process often obstructs several business transactions. As a result, revocation helps eliminate the obstructions, thereby making business transactions convenient. Thus, taxpayers need to check the GST cancellation status at regular intervals. Post - cancellation event, they can revoke following the appropriate process. 

Conclusion

The revocation of cancellation of GST registration gives taxpayers an opportunity to address and correct the issues that initially led to the cancellation making it one of the affordable services. By revoking the cancellation, taxpayers can rectify compliance issues, update their registration details and continue fulfilling their tax and legal obligations. Therefore, understanding the procedure and timeline is crucial. 

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