Justification For Cancelling The GST Registration

Taxpayers can cancel their registration, or the authorities may do it on their behalf if they have violated any regulations

All goods and services are now subject to a single domestic indirect taxation regime across the country due to the introduction of GST, or Goods and Services Tax, which replaced several other levies. The new system requires businesses with yearly revenue of more than ₹20 million to register for the Goods and Services Tax. 

The amount is set at ₹10 lakh for states with special status. However, companies also have the option to withdraw from the GST programme and give up their GST number. The term “GST cancellation” describes this practice. Keep reading to determine who is eligible to cancel GST, the cancellation process, and more. Cancellation of GST is subject to adherence to several norms and regulations.

What Is GST Registration Cancellation?

When taxpayers register for GST, they are provided with a GSTIN number to use moving forward. GST cancellation refers to the process by which either the central tax authority or the taxpayer can revoke this identification number. After cancelling their GST number, business owners are prohibited from doing business activities. 

If they persist in this behaviour, the Department of Income Tax will assess significant fines. Cancelling the GST Registration will relieve the company of any further GST obligations. That usually means the company is closing down or going through a name change.

Justifications for Abolishing GST

GST registration can be cancelled for any of the following reasons by the Central Tax Authority or a business owner 

• The individual is under old tax law

Some companies that filed taxes under the previous system are exempt from the GST registration requirement. For example, the threshold limit for VAT was ₹10 lakhs, whereas the threshold limit for GST is ₹40 lakhs. Those already registered for VAT are exempt from the GST registration requirement.

• Business Closure

When a company ceases operations, the owner can request that their GST registration be cancelled. The following are additional scenarios in which it can be revoked:

• If a company merges with another
• Transfer of all or part of a business for any cause, including the death of the owner
• Organisational structure revision
• If a taxpayer is exempt from remaining GST registered. Those who opted in for registration under Section 25 (3) of the CGST Act are not included
• If a GST composition scheme participant misses three months of returns
• The statute cancels the tax if a person violates GST provisions and laws
• If a person doesn’t file GST returns for six months
• If a business owner voluntarily registers under CGST section 25(3) but does not begin operations within six months of the registration date
• GST registration is obtained by deception, misrepresentation, or concealment of fact.

Who Can Cancel GST Registration?

The following parties can submit cancellation requests for GST registrations:

• Current taxpayers
• Migrated taxpayers with approved enrollment
• Migrated taxpayers who haven’t filled out any forms after applying
• Tax deductors/collectors and those with a unique ID cannot cancel GST

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How to cancel GST?

Cancelling your GST registration can be done in the following ways:

1. The tax office sends a show-cause notice using GST REG-17.
2. The taxpayer must give a justification to stop GST cancellation. In the event of formal notice, a reply must be issued within seven days.
3. If the tax officer is agreeable with the response, they will cancel the GST registration and issue a GST REG-20 order.

Method for taxpayer-initiated cancellation of GST

Those who have submitted tax returns and those who have migrated must follow various cancellation processes if they wish to terminate their GST registration. It includes:

Step 1: To log in to the GST portal. You can get into your GST account by entering your login details

Step 2: Select a menu option from the top bar of your GST account screen. Select ‘Registration’ from the ‘Service option’ dropdown menu. Next, select ‘Registration Cancellation Request’, There are now three sub-items on the dashboard: standard information, cancellation information, and confirmation information

Step 3: Fill out your dashboard’s ‘essential details’ box. Check the same as the above box, click save, and continue receiving future communications at the main office’s address

Step 4: The cancellation screen will appear after saving the essential information

Step 5: Select a cancellation reason for GST from a dropdown menu of six possible values. These include a sole proprietor’s death, end of tax liability, PAN change due to business constitution change, business discontinuance, and business transfer

Step 6: Include the following Information on the cancellation form: Refund for Goods and Services Tax, the Target date for withdrawing GST registration, Subject to tax stocks and inputs, and information regarding the most recent tax returns submitted

Step 7: Choose an electronic credit or cash ledger to record stock value and tax liabilities

Step 8: Enter the transferee entity’s GSTIN if a unit is transferred, demerged, or merged

Step 9: The verification area appears after you fill out the cancellation form. Identify the signing authority and deed’s location

Step 10: Please fill out the details of the authorised signatory below. After selecting the appropriate answer, please submit the information

Step 11: You can either ‘Submit to DSC’ or ‘Submit to EVC’. After filling out the verification form, an OTP will be generated. Go ahead and type in the OTP. Within the next 15 minutes, you will get a confirmation of receipt.

Cancellation of the Revocation of the GST

The term ‘revocation of cancellation’ describes the process of restoring a previously cancelled GST registration. This rule applies when a tax authority terminates a GST registration. Taxpayers must submit a revocation application within 30 days of the cancellation date. They need to fill out an application and hand it to the IRS to do this. The revocation application will be approved or denied at the discretion of the tax officer.

GST Cancellation Revocation Process

• If a tax official cancels GST registration, the taxpayer can revoke it using GST REG-21
• Within 30 days of cancellation, the taxpayer must apply via the tax portal
• The tax officer must approve the revocation. The officer has 30 days from the application receipt to revoke it using form GST REG-22
• A tax officer can reject a revocation GST registration application using the form GST REG-05. A show-cause notice is subsequently issued, to which the applicant must respond within seven days. The reply must justify why the application shouldn’t be denied
• After receiving the response, the tax officer must determine within 30 days. In such instances, you must utilise Form GST REG-24.

Conclusion

A taxpayer can file for a GST refund and monitor its status online. When they finally register, they have to ensure everything is in order. If no business is being conducted, it is best to request cancellation of the GST registration as soon as possible. The cancellation of a roll by the tax office does not relieve the taxpayer from filing a revocation of GST cancellation and paying any associated fines or GST cancellation fees. Vakilsearch should be consulted for additional information and assistance.