Goods and Services Tax enrollment can be Termination under many conditions as per recent laws. In this article, we will talk about all the regulations supporting the cancellations of GST.
The Goods and Services Tax department has introduced significant changes in the corporation’s operational activities and reviewing segments. The Termination of Goods and Services Tax enrollment reflects that the person paying the tax will no longer be a Goods and Services Tax-registered person. As a result, they will no longer have to collect or pay any amount of tax.
The taxpayers who were earlier registered under the Goods and Services Tax Act might apply for the Termination of the Goods and Services Tax enrollment at some point. It might occur when the taxpaying individual closes their business for specified reasons. Once the enrollment is Termination, the taxpayer will no longer be obliged to pay or collect tax from the general public.
However, getting registered under the Goods and Services Tax is essential for certain companies, which is why many people forgo the need to cancel their enrollment. If under exceptional circumstances, your business has withdrawn its Goods and Services Tax enrollment, but the company’s operation continues, then you might have to face many legal troubles. This may appear as a Goods and Services Tax offence and lead to heavy penalties.
Conditions for the Termination of Goods and Services Tax Enrollment
Under Goods and Services Tax laws, Goods and Services Tax enrollment can be Termination in the following situations:
- When the taxpaying individual makes voluntary Termination of the Goods and Services Tax certificate
- When the taxpaying individual passes away, the Termination of the Goods and Services Tax certificate can be applied by his legal nominee.
- When a tax offer cancels the certificate.
There are many legal provisions and sections under Goods and Services Tax law regarding the ‘Termination of Goods and Services Tax enrollment’ or ‘Retraction of Termination’. Such laws help a taxpayer understand his scope of Termination under many laws. We have listed some relevant Rules and Laws for the Termination of Goods and Services Tax certificates.
Laws for the Terminationof Goods and Services Tax enrollment
Here are 8 laws pertaining to the Termination of GST registration in the country that you should be aware of –
1- Sections 29 and 30 of CGST Act, 2017
The proper Goods and Services Tax officer may, either voluntarily or on an application filed by the registered person or by his legal nominee, in case of the death of a registered person, may cancel the enrollment . The enrollment may be suspended for such period and in such manner as prescribed in the act. Termination of enrollment under this section does not affect the liability of the person to pay tax and other dues under this Act. Every Goods and Services Tax-registered individual whose enrollment has been Termination needs to pay an amount that’s equal to the input tax credit in respect of either finished or semi-finished goods held in stock or capital goods like plant and machinery.
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2- Rules 20, 21 A, 22, 23, 44 and 81 of the CGST Rules, 2017.
- Rule 20 of the CGST Act 2017 states that the person applying for the Termination of the enrollment under sub-section 1 must submit an application in GST REG-16 FORM
- Rule 21 of the CGST Act 2017 highlights the suspended supply, which means that the person applying for Termination shall not issue a tax invoice and charge tax on supplies made by him during the suspension period
- Rule 22 of the CGST Act 2017 states that the application for the Termination must be submitted by the registered person himself. Once done, a GST officer may drop the proceedings and pass an order in GST REG -20 FORM
- Rule 23 of the CGST Act 2017 highlights the proceedings after the Termination, where the registered person will have to furnish all the returns from the effective Termination date till the date of order for the Retraction of the Goods and Services Tax certificate
- Rule 44 of the CGST Act 2017 reveals the manner of reversal of credit under exceptional circumstances. The rule also states details of input tax credit for capital goods that shall be determined in the same way as specified in clause (b) of sub-rule (1) of section 18 relating to capital goods and the details of the amount filed in FORM Goods and Services Tax ITC- 03
- Rule 81 of the CGST Act 2017 states the final return proceeding where every registered person must file a final tax return under section 45 by filling out Form GSTR-10 through the common portal.
3- GST dated 11 February 2021 – Circular no. 145/01/2021
SOP for implementation of Rules 21 A(2A) of CGST Rules, 2017 reflects until the time functionality for REG-31 FORM is made available on the online Goods and Services Tax portal. These particular notices or intimations should be made available to the taxpaying individual on their individual dashboard on the common online portal in GST REG-17 FORM.
4- GST dated 24 December 2019 – Circular no. 129/48/2019
The circular is directed on SOP for non-filers of returns. It is taken with Section 46 of the CGST Act, which requires issuing a notice in writing in Form GSTR-3A to the registered person who fails to file the return within 15 days of the application.
5- GST dated 26 October 2018 – Circular no. 69/43/2018
The circular highlights the proceedings of applications for Termination submitted in Form Goods and Services Tax REG-16 (to be filled in case of voluntary Termination by the taxpayers).
6- Enrollment Advisory no. 07/2022 dated 23 March 2022
The circular informs the introduction of the restoration of Termination enrollment based on appellate order. This can be done by filling out Form Goods and Services Tax REG-21. You must apply for the restoration within 30 days of receiving the notice of cancellation of GST registration.
7- GST dated 18 May 2021 – Circular 148/04/2021
SOP for the implementation of the provision of extension of time limit to apply for the enrollment Termination as per GST Act and Rule 23 of the CGST Rules.
8- GST dated 06 September 2021 – Circular no. 158/14/2021
The circular states the details on the extension of the total time limit for the application of Retraction and Termination of the Goods and Services Tax Enrollment. This only stands applicable when thirty days since the Enrollment Termination has not lapsed as on 1 January 2021. The time limit shall be extended If it has elapsed by 31 August 2021. As a result, the time limit for the application of Retraction stands extended upto 30 September 2021 without any further extension.
Conclusion
Termination the Goods and Services Tax certificate requires the registered person to comply with many laws and regulations. To know more about rules and regulations on Goods and Services Tax Termination, or if you need any help in this regard, get in touch with our legal experts at Vakilsearch.
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