Surrender and Cancellation of Registration under GST | Procedure

Following provisions of the Central Goods and Services Tax Act, 2017 mainly governs cancellation of GST registration under GST

• Section 29 – Cancellation or suspension of registration;
• Rule 20 – Application for cancellation of registration;
• Rule 22 – Cancellation of registration.

The basic provisions of  surrender and cancellation of registration under GST as covered under section 29 of the Central Goods and Services Tax Act, 2017 prescribes as under -

• The proper officer may on his own motion cancel the GST registration; or
• The proper officer may on an application filed by the registered person or the legal heirs (in case of death of the registered person) cancel the GST registration.

Thus, GST registration can be cancelled either when a registered person wants the registration to be cancelled or when the proper officer (on his own motion) cancels the same.

Yes, notably, GST law empowers the proper officer to cancel the GST registration in case of specified circumstances.

Rule 21 of the Central Goods and Services Tax Rules, 2017 demonstrates the circumstances when the registration granted to the person is liable to be cancelled. The said circumstances are highlighted hereunder –

• The registered person has not conducted any business from the declared place of business;
• The registered person is involved in issuing invoices or bill without actual supply of goods or services or both;
• There is a violation of provisions of section 171 of the Central Goods and Services Tax Act, 2017 (i.e. Anti-profiteering measures) or the rules made thereunder;
• There is a violation of provisions of rule 10A of the Central Goods and Services Tax Rules, 2017 (i.e. Furnishing of Bank Account Details);
• There is a violation of provisions of rule 86B of the Central Goods and Services Tax Rules, 2017 (i.e. Restrictions on the use of amount available in electronic credit ledger);
• The registered person avails input tax credit in violation of provisions of section 16 of the Central Goods and Services Tax Act, 2017 or the rules made thereunder;
• Details of outward supplies furnished via Form GSTR-1 is in excess of details of outward supplies declared in Form GSTR-3B for one or more tax periods;
• The registered person failed to furnish the monthly return in Form GSTR-3B for a continuous period of six months;
• The registered person failed to furnish quarterly returns in Form GSTR-3B for a continuous period of two tax periods.

Additionally, going through the provisions of section 29(2) of the Central Goods and Services Tax Act, 2017, the registration of the person can be cancelled under the following circumstances also –

• A composition scheme dealer has not furnished the returns for consecutive three tax periods;
• Any other registered person (other than composition scheme dealer) has not furnished the returns for a continuous period of six months;
• The person has not commenced business within a period of six months from the date of registration;
• The registration has been obtained by the person by means of fraud, suppression of facts or wilful misstatement.

As and when the proper officer has a reason to believe that the GST registration of the person needs to be cancelled (as per any of the circumstances stated above).

Then, the proper officer needs to follow the below-mentioned procedure as prescribed under rule 22 of the Central Goods and Services Tax Rules, 2017 –

• Issue a show cause notice in Form GST REG-17;
• The registered person, on receipt of notice in Form GST REG-17, needs to reply via Form GST REG-18 within a period of seven working days;
• Post submission of reply, if the proper officer is not satisfied and concludes that registration is liable to be cancelled. Then, the proper officer is required to issue an order in Form GST REG-19, within a period of 30 days, cancelling the registration;
• However, if the proper officer is satisfied with the reply, then, he is required to drop the proceedings by issuing an order in Form GST REG-20.

The registered person can apply for cancellation/ surrender of GST registration under the following circumstances –

• The business has been discounted;
• On account of transfer of business (which also includes the death of a proprietor);
• The business is completely amalgamated, demerged or disposed of;
• The person is no longer liable to the registered under GST [i.e. either turnover is below the minimum threshold limit or the person is no longer covered under provisions of section 24 (compulsory registration)].

The registered person willing to apply for cancellation/ surrender of GST registration needs to follow the below-mentioned steps-

• Electronically furnish an application in Form GST REG-16;
• Additional details to be furnished along with the application in Form GST REG-16

Provisions of section 45 of the CGST read with rule 81 of the CGST deal with the requirement of furnishing of Final Return. The same is simplified hereunder