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In India’s complex indirect tax landscape, the Goods and Services Tax (GST) stands as a central pillar. Registration for GST is mandatory for businesses that cross a specified turnover threshold, granting them the authority to collect GST from customers and claim Input Tax Credit (ITC) on their purchases. However, there are situations where a business’s GST registration might be revoked.

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Understanding the meaning of a cancelled registration

Simply put, a cancelled GST registration means that a business’s GST status is terminated. This can occur either voluntarily or involuntarily. Voluntary cancellation happens when a business owner chooses to cancel, often due to their turnover falling below the threshold or the business closing down. Involuntary cancellation, on the other hand, is initiated by the tax authorities, usually due to non-compliance with GST rules.

Who can cancel GST registration?

Usually, it is seen that GST Registration can be cancelled by any of the following:

Initiator Reason
Taxpayer Voluntary closure of business, turnover below threshold
Tax Officer Non-compliance with GST rules, fraud
Legal Heirs Passing away of a tax payer

GST Cancellation for migrated taxpayers

Businesses that migrated from earlier tax systems to GST have a unique situation. If you fall under this category, specific provisions apply to the cancellation of your GST Identification Number (GSTIN). It is important to be aware of these rules to avoid any surprises down the line.

Why does GST Registration get cancelled?

GST registration cancellation can occur due to a variety of reasons, falling under two main categories:

1. Voluntary cancellation:

  • Closure of Business: When a business ceases operations permanently, it is required to cancel its GST registration.
  • Turnover Below Threshold: If a business’s annual turnover falls below the threshold limit specified for GST registration, it may opt for voluntary cancellation.
  • Change in Business Constitution: Significant changes in the legal structure of a business, such as a change in PAN (Permanent Account Number), may necessitate cancellation.
  • Transfer of Business: In cases of mergers, demergers, or transfers of business ownership, the original GST registration might need to be cancelled.

2. Involuntary cancellation (Non-Compliance):

  • Non-Filing of Returns: Consistent failure to file GST returns within the due dates can lead to cancellation by the tax authorities.
  • Non-Payment of Taxes: If a business does not pay its GST dues within the stipulated time, the registration can be cancelled.
  • Violation of GST Rules: Engaging in fraudulent activities, misrepresenting information, or violating other GST regulations can result in cancellation.
  • Other Reasons: Other reasons may include not commencing business within six months of registration or providing incorrect information during registration.

Forms for cancellation

Type of Cancellation Form
Voluntary Cancellation FORM GST REG-16
Cancellation by Tax Officer FORM GST REG-19

Voluntary Cancellation (FORM GST REG-16):

If you wish to voluntarily cancel your GST registration, you will need to fill out and submit FORM GST REG-16. This form requires details like your GSTIN, reason for cancellation, details of any remaining stock, and any outstanding tax liabilities. It is crucial to provide accurate information and supporting documents to ensure a smooth cancellation process.

Cancellation by Tax Officer (FORM GST REG-19):

When a tax officer decides to cancel a GST registration due to non-compliance or other violations, they issue a cancellation order in FORM GST REG-19. This form details the reasons for cancellation and the effective date of cancellation. If you receive this form, it means your GST registration has been cancelled by the authorities.

Consequences of cancelled GST registration

To have your GST registration cancelled is not just an administrative change; there are real-world consequences for your business. First and foremost, you will lose your ability to claim Input Tax Credit. This means you will not be able to offset the GST you have paid on purchases, increasing your overall tax burden. Additionally, some business activities might become restricted or even impossible without a valid GST registration. And if the cancellation was due to non-compliance, get ready for penalties and potential legal issues.

Steps to re-instate cancelled GST registration on the GST portal

If your GST registration has been cancelled, you can take steps to reinstate it through the GST portal. Here is a step-by-step guide on how to apply for revocation of cancellation:

To revoke a canceled GST registration, first log in to the official GST portal. Explore the process of GST Registration on our official page.

1. Go to ‘Services’ > ‘Registration’ > ‘Application for Revocation of Cancellation.’

2. Fill in FORM GST REG-21 with required details and the reason for revocation.

3. Attach supporting documents to prove that the cause of cancellation is resolved.

4. Submit the application and track its status on the portal.

The tax officer will review the application and documents, and if satisfied, issue an order to restore your GST registration within 30 days.

Can a business re-register for GST after cancellation?

In most cases, a business can re-register for GST after cancellation. However, the process is not always as simple as starting from scratch. There might be certain conditions or a waiting period you need to fulfill before you can re-register.

The eligibility criteria for re-registration and any associated waiting period can differ based on the reason for your initial cancellation. For instance, if your registration is cancelled due to non-compliance, you might face stricter conditions or a longer waiting time.

Read more: A detailed guide on GSTR-10: the final return due to cancellation

Cancelled GST registration can be a daunting experience for any business owner. However, understanding the reasons, consequences, and steps to reinstate can help you navigate the process effectively. By being proactive, complying with GST regulations, and seeking professional advice when needed, you can ensure that your business stays on the right side of the tax laws and continues to thrive.

Remember, GST is a dynamic system, and rules and regulations may change. Always refer to the official GST portal or consult with a tax expert for the latest updates and clarifications.

*Disclaimer: This article is solely for educational purposes. For latest and accurate information, visit the GST official website: //www.gst.gov.in/

FAQs

Can I get a refund of the GST paid after cancellation?

In most cases, you will not be able to get a refund of the GST paid on goods or services purchased before cancellation. However, you may be able to claim an input tax credit on these purchases if you re-register for GST within the specified time frame. 

Can I operate my business while my revocation application is pending?

No, you cannot operate as a registered business while your revocation application is pending. Your GST registration remains cancelled until the revocation is approved 

What if my revocation application is rejected?

If your revocation application is rejected, you may have the option to appeal the decision. You can consult with a tax professional for further guidance. 

A product manager with a writer's heart, Anirban leverages his 6 years of experience to empower MSMEs in the business and technology sectors. His time at Tata nexarc honed his skills in crafting informative content tailored to MSME needs. Whether wielding words for business or developing innovative products for both Tata Nexarc and MSMEs, his passion for clear communication and a deep understanding of their challenges shine through.