How to Handle GST REG Cancellation & Revocation
In India, cancelling a GST registration is a statutory procedure governed by Section 29 of the Central Goods and Services Tax (CGST) Act, 2017, read with Rules 20 to 23 of the CGST Rules. Compliance with the specified legal timelines and procedural measures is mandatory for the one who initiated the cancellation: a taxpayer, a legal heir, or the tax department.
Who Can Start GST Cancellation?
Voluntary Cancellation by the Taxpayer: A registered taxable person can apply for voluntary cancellation online via Form GST REG-16. This application can be submitted at any time, regardless of whether the financial year has concluded. Valid reasons for voluntary cancellation u/s 29(1) include:
- Discontinuance or permanent closure of business
- Transfer of business due to sale, merger, demerger, or amalgamation
- Change in the constitution of the business (e.g., transition from a sole proprietorship to a partnership or private limited company)
- Turnover falling below the threshold required for mandatory registration under Section 22
- Opting out of voluntary GST registration
Cancellation by Legal Heirs: In case of the death of a sole proprietor, their legal heirs can apply for cancellation or transfer the registration to a new entity.
Suo Moto Cancellation by GST Officers: U/s 29(2), the Proper Officer may initiate cancellation in the below-mentioned situations:
- Non-filing of GST returns for prescribed continuous periods
- Conducting business from an undeclared place of business
- Issuing invoices without actual supply of goods or services
- Failure to commence business within 6 months of obtaining voluntary registration
- Obtaining registration through fraud, willful misstatement, or suppression of facts
Note: GST cancellation is never automatic. Before cancellation, the officer should issue a Show Cause Notice (SCN) in Form GST REG-17. The taxpayer is provided 7 working days to give a reply in Form GST REG-18 before any cancellation order is passed.
Documents and Information Required for Cancellation
On filing Form GST REG-16, the applicant should furnish:
- Updated contact details (mobile number and email address)
- The specific reason for cancellation and the intended effective date
- Complete inventory details of inputs held in stock, semi-finished goods, finished goods, and capital goods
- Payment of an amount equal to the Input Tax Credit (ITC) taken on such stock/capital goods or the output tax liability on the transaction value of such goods, whichever is higher (debited via cash or credit ledger)
Read Also: How to Match GSTR-2B and Claim ITC for GST Compliance?
Filing the Final Return (Form GSTR-10)
After passing a cancellation order, every regular taxpayer is required to submit a Final Return in Form GSTR-10 within 3 months of the date of the cancellation order or the effective cancellation date, whichever is later (Section 45).
Failure to file: If Form GSTR-10 has not been submitted within the 3-month window, a statutory notice in Form GSTR-3A will be provided, requiring the taxpayer to complete the filing within 15 days.
What Actions to be Taken if GST Officials Cancel Your Registration
If a GST officer cancels a registration on its own, the taxpayer can apply for revocation u/s 30 and Rule 23 via Form GST REG-21:
Timeline: The application for revocation should be submitted within 90 days from the date of service of the cancellation order. The duration can be extended up to an additional 180 days by the Commissioner (or an officer not below the rank of Additional/Joint Commissioner) upon showing sufficient cause.
Prerequisites: If registration is cancelled due to the non-submission of returns, the taxpayer should submit all pending returns and pay all taxes, interest, late fees, and penalties owed before filing the application for revocation.