How Does Suo Moto GST Cancellation Work?

12 August 2024

9,440 7 mins read

Suo moto cancellation of a GST registration refers to the tax officer's decision to terminate a GST registration. Read on to learn all about Suo Moto GST cancellation in this blog.

When registration for the Goods and Services Tax (GST) is canceled suo moto, it means at the tax officer’s own initiative. To start the cancellation proceedings, the tax officer must have a good cause as defined by Section 29(2) of the CGST Act.

Table of Contents

What is Suo Moto Cancellation under GST?

The Tax Official has the authority to initiate the suo moto cancellation of registration under various circumstances, as outlined in the provisions of the GST law.

These situations include, but are not limited to:

Non-filing of returns by any taxpayer (excluding composition taxpayers) for a continuous period of six months.
Supplying goods and/or services without issuing invoices, violating the provisions of the Act or rules to evade tax.
Issuing invoices or bills without the actual supply of goods and/or services, leading to wrongful availment or utilization of input tax credit or tax refund.
Collecting tax amounts but failing to remit them to the Central/State Government within three months from the due date.
Failing to pay any tax, interest, or penalty to the Central/State Government within three months from the due date.
Ceasing to be liable for deducting tax at source or collecting tax at source as per GST Law provisions.
No longer required to be registered under the GST Law.
GST Practitioner found guilty of misconduct in connection with any GST Law proceeding.
Discontinuation or closure of business.
Change in constitution resulting in a PAN change.
Ceasing to be liable to pay tax.
Transfer of business due to amalgamation, merger/demerger, sale, lease, or disposal.
Death of a sole proprietor.
Composition person not furnishing returns for three consecutive tax periods.
Obtaining registration through fraud, willful misstatement, or suppression of facts.

These instances empower Tax Officials to take action for the suo moto cancellation of GST registration.

Reasons for Suo Moto GST Cancellation

Suo Moto The officer may initiate the cancellation of registration for any of the grounds listed in the GST law’s provisions, such as:

Without issuing an invoice, or providing any goods or services to avoid paying taxes.
Any taxpayer who isn’t a composition taxpayer and who hasn’t filed any returns for a continuous six months
The dealer in compositions has not provided returns for three consecutive tax periods.
Issues any invoice or bill without supply of goods and/ services in violation of the GST law leading to wrongful availment or utilization of input tax credit or refund of tax.
Regardless of the amount, collects tax but fails to pay it to the federal or state government within three months of the date the payment is due.
Refuses to reimburse the Central or State Government for any taxes, interest,

or penalties within three months of the date that they become due.

No longer necessary for a person to be GST registered
A GST Practitioner is found to have violated the GST Law in connection with any proceeding.
Business discontinuation or shutdown Constitutional change resulting in PAN change

ceased to be subject to taxation

A business that is sold, leased, combined with another business, or otherwise disposed of.
Death of Sole Proprietor
Registration was obtained through deception, deliberate false statements, or the omission of information. Etc.

How will the taxpayer be informed about Suo Moto Cancellation under GST?

The taxpayer will receive notification of this by email and SMS. The primary authorized signatory will get an email and SMS containing an order to revoke the GST registration.

The order will be made viewable, printable, and downloadable on the taxpayer’s dashboard.

The Opportunity of Being Heard

Registration cannot be revoked without providing the taxpayer with a Show Cause Notice (SCN) and a reasonable opportunity to be heard by the officer.

Thus, the Tax Official must serve the taxpayer with an SCN before Suo Moto cancellation proceedings take place. Officials will be asking why his/her registration should not be canceled.

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What Effects would the Cancellation of Suo Moto have?

The status of the GSTIN/UIN/GSTP ID will change from “Proceeding for Cancellation initiated” to “Inactive,” and the other relevant Tax Authority will be informed.
After the cancellation date specified in the cancellation order, the taxpayer will not be able to file the return or upload invoices during that time.
Following the issuance of the cancellation order, the taxpayer will not be able to change the registration details. Email and mobile numbers, however, can still be updated up until the time that the debt or refund is paid.

The facility to apply for revocation will be available for the canceled registration.

After getting a notice of cancellation, what choices does the taxpayer have?

7 working days from the date of receipt of the Show Cause Notice, the Taxpayer must respond within the statutory time frame (SCN).

If the officer is satisfied with the taxpayer’s response,

Proceedings may be terminated.
By SMS and email, the primary authorized signatory will be informed that SCN has been dropped.
Order will be made accessible to the taxpayer’s dashboard for viewing, printing, and downloading.
GSTIN’s “Suspended” status will become “Active.”

The official may continue with the cancellation of registration if no response is provided within the allotted 7 working days.

What Are the Pre-conditions for Suo Moto Cancellation?

The tax department has the power to cancel your GST registration without you asking. This is called ‘Suo Moto Cancellation’. This can happen if:

You lied or hid information when you first registered for GST.
You didn’t register for GST within the required 90 days of starting your business.
You stopped filing your GST returns for six months straight (or three months if you’re on a simplified scheme).
You sold goods or services without a bill to avoid paying taxes.
You didn’t pay the taxes you collected to the government on time.
You didn’t pay interest, penalties, or taxes you owed within 90 days.
You did something wrong during a GST investigation.
Your business structure changed (like becoming a partnership or a company).
Your business closed down or stopped operating.

It’s important to keep your GST records up-to-date to avoid your registration being cancelled.

How to Activate Cancelled Suo Moto GST Registration?

If your GST registration has been mistakenly cancelled by the tax department, you can try to get it back. Here’s how:

Step 1: Log in to the GST portal: Use your login details to access your GST account.
Step 2: Find the right section: Look for the part of the portal that deals with registration. You’ll likely find an option to apply for the revocation of a cancelled registration.
Step 3: Explain why you want your registration back: Clearly state your reasons for requesting the reactivation. You’ll probably need to provide supporting documents.
Step 4: Submit your application: Once you’ve filled in the required details and attached necessary papers, submit your application.
Step 5: Wait for a decision: The tax department has 30 days to review your request. They’ll let you know if they’ll reinstate your registration.

If approved, your GST registration will be reactivated, and you can start filing returns and issuing invoices again.

What is the Procedure for Suo Moto Cancellation of GST Registration?

Before the tax department can cancel your GST registration, they have to give you a chance to explain yourself. This is called a ‘show-cause notice’.

Here’s what happens:

You get a warning: The tax department sends you a letter explaining why they think your registration should be cancelled.
You have your say: You have seven days to respond to the letter and explain why you think your registration shouldn’t be cancelled.
The decision: The tax department will review your response. If they’re not satisfied, they can cancel your GST registration.

It’s important to respond to the show-cause notice on time and provide a clear explanation. This could help you keep your GST registration active.

What Actions are Permitted on the GST portal after the Suspension of the GSTIN?

When a taxpayer requests to have their registration canceled or When a Suo Moto cancellation has been started by the Tax Officer, the status of the GSTIN will show as “Suspended”.

A taxpayer can carry out the following actions on the GST website after GST is suspended:-

Filing of appeal
Making payment
Filing for refunds
Only for the time frame before the registration suspension may you file a return or upload invoices.
Response to orders/notices related to assessment/recovery/enforcement/related matters, non-core amendment, etc.

When does the suspension of the GST take effect?

If a taxpayer requests to have their registration canceled. The date that their registration was suspended is the day that their cancellation request was submitted.

The date of suspension will be the date on which SCN for cancellation of registration is issued if Suo Moto GST Cancellation has been initiated by the GST officer.

Can earlier period returns be filed after a Suo Moto cancellation of the GST registration?

After Suo Moto GST Cancellation, returns for the prior period. it should be done before the cancellation date specified in the cancellation order) may be filed.

The taxpayer will not, however, be permitted to submit returns or upload invoices for the period.

following the cancellation date specified in the cancellation order.

Additionally, GSTP will not be able to perform GSTP duties on your behalf for a certain amount of time following the cancellation date specified in the cancellation order.

How can the GSTIN’s “Suspended to Active” status be changed?

Only when the officer denies the application for cancellation of registration or when the Suo Moto cancellation process is abandoned after a hearing will the GSTIN’s status change from “Suspended” to “Active.”

A taxpayer will once again be treated as an active taxpayer and will have immediate access to all of the features provided to active taxpayers on the GST Portal once the status of his GSTIN is changed from “Suspended” to “Active.”

Conclusion

We hope that after reading the information above, one has a better understanding of how the Suo Moto GST Cancellation works.

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FAQs

What if GST cancelled suo moto?

Any liabilities preceding the date of suo moto cancellation must be settled by the taxpayer, regardless of when the determination of liabilities is made as recovery can occur even post-GSTIN cancellation.

How do I respond to suo moto GST cancellation notice?

To respond to the Show Cause Notice for Suo Moto Cancellation, go to Services > Registration > Application for Filing Clarifications. In the application, the reasons for cancellation provided by the Tax Officer will be displayed, and you can enter your response.

What is considered to be the effective date of GST suspension?

The effective date of cancellation will be as mentioned in the cancellation order.

What changes can be carried out on the GST portal after suo moto cancellation of GST registration?

After the issuance of the cancellation order, amendments to the registration cannot be made. However, updates to the email address and mobile number are possible until dues/refunds are cleared.