Form GST REG 20: Order Dropping GST Registration Cancellation

There are many reasons why the Indian Government might initiate a cancellation of your GST registration. Most of these reasons are non-compliance with GST regulations in one way or another. However, they offer you an opportunity to stop the cancellation process. You can file a response to that in Form GST-REG-18.

It is your opportunity to safeguard your GST registration after successfully presenting your case to the tax authorities. Governed by Rule 22(4) of the Central Goods and Services Tax Rules 2017, this form can turn the tide in your favour.

This guide will explore when cancellation proceedings begin, how to respond, along with how REG-18 plays a crucial role in preserving your compliance status.

Under What Circumstances Can an Officer Initiate The GST Registration Cancellation Process?

Under Section 29(2) of the CGST Act, 2017, a proper officer or Tax Officer can initiate a cancellation of registration under several conditions:

• If a taxable person fails to file GST returns for three consecutive tax periods.
• For persons other than those under the composition scheme, failure to file returns for six consecutive months can result in cancellation.
• If a business fails to commence operations within six months of voluntary registration, its GST registration can be cancelled.
• A violation of provisions of the CGST Act or relevant rules can also trigger cancellation.
• In cases where GST registration was obtained fraudulently.
• If the registered individual is deceased, Legal Heirs must apply for cancellation, and failure to do so may lead to cancellation proceedings.

What Should be The Response of a Taxpayer To a GST Registration Cancellation Process?

Upon receiving a show-cause notice from the GST officer via the GST portal, a taxpayer who wishes to continue with their GST registration must respond by filing Form GST REG-18. This return should be filed within 7 working days of the issuance of the notice.

Justification, along with supporting papers like filings of Income Tax Returns, evidence of business operation, and any other pertinent information must be included by the taxpayer.

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Laying Down Cancellation of GST Registration by Issuing an Order in Form GST REG-20

If the officer is content with the response filed by the taxpayer on Form GST REG-18, the cancellation proceedings are abandoned. In this case, an order is made on Form GST REG-20, formally cancelling the cancellation of registration procedure.

The order generally comprises the following:

• The reference number and date of the original show-cause notice.
• The ARN and filing date of the response (Form GST REG-18).
• A statement declaring that the cancellation proceedings are dropped.
• Comments by the officer explaining the acceptance of the justification.

It is important to understand that this process plays a crucial role in protecting the rights of taxpayers along with maintaining business continuity. This is particularly significant if they relate to compliance matters like Input Tax Credit claims, tax defaults, or late fee waivers.

Conclusion

Form GST REG-20 is a relief for taxpayers who are able to persuade the authorities of their willingness and capacity to follow GST laws. As soon as this form is released, the proceedings for cancellation of registration come to a halt officially.

However, regular filing of GST returns, keeping proper records, and appropriate utilisation of the GST portal are the ways to avoid such scenarios in the first place.

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