Goods and Services Tax (GST) registration of a taxable person may be cancelled voluntarily or by a tax officer due to several reasons. Such cancellations result in interruptions in business operations. As a registered person, you can apply for activation of registration if you receive a notice from the proper officer.

Learn how to activate cancelled GST registration in detail in this blog. Further, learn about the time limit and new rules pertaining to the time limit for revocation of registration to ensure non-cancellation and seamless business furtherance.

What Is the Cancellation of GST Registration?

Cancellation of registration denotes that the taxpayer will no longer be registered under GST. Further, he or she will not have to pay or collect GST, initiate the filing of returns or claim an input tax credit.

Reasons for Suspension/Cancellation of GST Registration

A tax officer can cancel the registration of a taxpayer on a date or a retrospective date if the taxpayer has not filed returns for a period of consecutive 6 months. The provision is highlighted in Section 29(2) of the CGST Act 2017. Further, the procedure is mentioned in Rule 21 of the CGST Rules 2017.

However, there can be other reasons for registration cancellation. Some of these reasons are discussed below: 

• If there is a change in the business constitution
• When there is a transfer, discontinuity and closure of the business
• If a taxpayer cannot follow the provisions of the GST Act
• When a taxpayer voluntarily applies for cancellation
• If the taxpayer has obtained the GST number using fraudulent methods
• When the taxpayer operates the business from a place other than the mentioned place on the GST portal
• If a taxpayer fails to start a business within 6 months from the date of registration
• When a taxpayer provides invoices without supplying goods and services
• If a taxpayer fails to present his or her bank account details
• When a taxpayer is registered under the composition scheme and has not filed returns for consecutive 3 tax periods

What Are the Consequences of GST Registration Cancellation?

Here are the consequences of GST registration cancellation or suspension for a supplier:

• The supplier will not be able to supply taxable goods and services, issue invoices or collect taxes.
• A registered taxpayer will not be able to pay taxes or file GST returns.
• The supplier cannot claim an input tax credit.

A taxpayer needs to connect with the assessing officer immediately after getting notice for registration suspension for rectification and activation. Failure to comply with the rules will otherwise result in cancellation of registration and penalties due to non-compliance.

How to Cancel GST Registration?

The process to cancel registration differs for other than migrated taxpayers and when cancelled by a tax officer. Here are the processes:

For Other Than Migrated Taxpayers

Reasons for Cancellation

Here are the reasons for cancellation by a taxpayer:

• Discontinuation of business
• Change in the constitution of business
• The business is transferred, amalgamated, disposed of or demerged. In such a case the transferor needs to cancel the registration.

Forms for Cancellation

Taxpayers can use Form GST REG-16 to cancel the registration. Further, legal heirs can follow the process below to apply for registration cancellation for a deceased person:

• Using form GST REG-16 for application.
• Enter details related to inputs, semi-finished and finished goods in stock on the date on which you apply for registration cancellation.
• Fill in the details related to payment and liability.
• The proper officer will review the application and issue a cancellation order in form GST REG-19 within 30 days from the application date.

By Tax Officer

Reasons for Cancellation

Here are the reasons for the cancellation of registration by a tax officer:

• When the taxpayer does not conduct business from the declared place of business
• If a taxpayer issues invoices or bills without an actual supply of goods and services
• When a taxpayer violates the provisions of anti-profiteering
• If a taxpayer does not file GSTR-1 due to non-filing of GSTR-3B for consecutive 2 months
• When a taxpayer violates Section 16 of the Act and claims an input tax credit
• If the taxpayer uses ITC from the electronic ledger to discharge 99% of the tax liability in violation of Rule 86B

Procedure for Cancellation

Here is the cancellation procedure of registration initiated by a tax officer:

• The tax officer will send a show-cause notice in Form GST REG-17
• A taxpayer must respond to the officer’s notice in Form GST REG-18 within 7 days from the date of issuance of the notice mentioning the reasons for non-cancellation
• If the tax officer finds the reasons to be satisfactory, he will pass an order to drop the proceedings in form GST REG-20
• When the tax officer finds the reasons to be satisfactory, he will pass an order in GST REG-19 within 30 days of receiving the response to cancel the registration.

How to Activate a Suspended GST Number?

If the GST registration of a taxpayer is cancelled by a tax officer, the taxpayer can apply for reactivation of the registration within 30 days by complying with previous defaults. However, if the taxpayer has voluntarily applied for cancellation, he or she cannot apply for revocation.

The taxpayer can opt for automated drop proceeding once he or she files pending GST returns. Here is the automated drop proceedings process to activate GSTIN:

Step 1: The taxpayer has to log in to the official GST portal, navigate to the ‘Services’ section and select the ‘User Services’ option.

Step 2: As a taxpayer, you have to click on the ‘View Notices and Orders’ option from the drop-down menu.

Step 3: You need to click on the ‘Initiate Drop Proceedings’ option.

Step 4: Your screen will display a message, stating ‘Drop Proceedings Has Been Initiated Successfully’. This indicates that the suspension is automatically dropped and the GST number gets activated.

The automated drop proceedings option is available for taxpayers who have registration cancelled after 1st December 2022. As a result, the taxpayers who have registration cancelled before the date need to approach the jurisdictional tax officer for revocation and activation of GSTIN.

Further, taxpayers who have lapsed show cause notice, but have paid pending GST returns have to contact the jurisdictional tax officer for revocation. This facility helped multiple taxpayers who have been unable to file returns in time due to various circumstances.

Time Limit for Filling Application for Activation of Cancelled GST Registration

If a GST registration is cancelled by a tax officer and the taxpayer receives a notice on the same then the taxpayer can apply for revocation or activation of the cancelled registration within 30 days from the date of receiving the notice. In some cases, however, the time period is extended to 90 days.

New Rule on Revocation of Cancellation of GST Registration

Based on the new notification, Notification number 38/2023, Central Tax dated 4th August 2023, the time limit for revocation of GST cancellation has been increased from 30 days to 90 days. The time limit can be further extended to 180 days by the GST commissioner or officer.

Conclusion

Since now you know how to activate a cancelled GST registration, ensure you do not delay applying for revocation if your GST registration is cancelled by a tax officer. Further, ensure you respond to the show cause notice of cancellation within 7 days using the right form for a seamless activation of cancellation.

You can alternatively follow the automated drop proceedings process for revocation and activation of your registration.

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