Section 29 proves that in which circumstances, registration may be cancelled or suspended or cancellation proceedings may be dropped.

Section 29(1)

PO may,

either on his own motion or

on an application filed by RP or by his legal heirs, in case of death of RP,

cancel the registration,

in such manner and within such period as may be prescribed,

Section 29(1)

In following circumstances, PO may cancel the registration on an application filed by the RP or by his legal heirs, in case of death of RP

(a) the business has been discontinued, transferred fully for any reason including death of the proprietor, amalgamated with other legal entity, demerged or otherwise disposed of; or

(b) there is any change in the constitution of the business; or

[1][(c) the taxable person is no longer liable to be registered u/s 22 or 42 or intends to opt out of the registration voluntarily made u/s 25(3)]

Circumstances when application for cancellation of registration in GST REG-16

a taxpayer can apply for cancellation of registration in GST REG-16 in the following circumstances:

a. Discontinuance of business or closure of business;

b. Transfer of business on account of amalgamation, merger, de-merger, sale, lease or otherwise;

c. Change in constitution of business leading to change in PAN;

d. Taxable person (including those who have taken voluntary registration) is no longer liable to be registered under GST;

e. Death of sole proprietor;

f. Any other reason (to be specified in the application).

Question & Answer

Rule 20

A RP, other than a person to whom

a TDS/TCS registration granted u/r 12 or

a UIN has been granted u/r 17,

seeking cancellation of his registration u/ss 29(1)

shall electronically submit an application in GST REG-16,

Stock and other details required in REG-16

REG-16 shall include the details of

inputs held in stock or

inputs contained in semi-finished or finished goods held in stock and

capital goods held in stock

on the date from which the cancellation of registration is sought, liability thereon, the details of the payment, if any, made against such liability and

may furnish, along with the application, relevant documents in support thereof,

within a period of 30 days of the occurrence of the event warranting the cancellation:        

Circular No. 69/43/2018 - GST dated 26-10-2018

3.

As per Rule 20 cancellation application must be submitted within a period of 30 days of the occurrence of the event warranting the cancellation

The Circular clarified that in cases where it is difficult to exactly identify or pinpoint the day on which such an event occurs.

For instance, a business may be transferred/disposed over a period of time in a piece meal fashion.

In such cases, the 30-day deadline may be liberally interpreted and the taxpayers‟ application for cancellation of registration may not be rejected because of the possible violation of the deadline

5

Since the cancellation of registration has no effect on the liability of the taxpayer for any acts of commission/omission committed before or after the date of cancellation,

proper officer should accept all such applications within a period of 30 days from the date of filing the application, except in the following circumstances:

a) The application in GST REG-16 is incomplete, i.e. where all the relevant particulars, as detailed in para 4 above, have not been entered;

b) In case of transfer, merger or amalgamation of business, the new entity in which the applicant proposes to amalgamate or merge has not got registered with the tax authority before submission of the application for cancellation.

order for cancellation should be issued in GST REG-19 with the effective date of cancellation being the same as the date from which the applicant has sought cancellation in FORM GST REG-16. In any case the effective date cannot be a date earlier to the date of application for the same.

Section 29(2) read with Rule 21

PO may cancel the registration from such date, including any retrospective date, as he may deem fit, where,–

(a) a RP has contravened such provisions of the Act or the rules made thereunder as may be prescribed [Rule 21]; or

(b) a Composition Dealer paying tax u/s 10 has not furnished [2][the return for a FY beyond 3 months from the due date of furnishing the said return]; or

(c) any RP, other than composition dealer, has not furnished returns for continuous periods of 6 months or 2 tax periods; or

(d) any person who has taken voluntary registration u/s 25(3) has not commenced business within 6 months from the date of registration; or

(e) registration has been obtained by means of fraud, wilful misstatement or suppression of facts:

Rule 21

1. does not conduct any business from the declared place of business; or

(b) issues invoice or bill without supply of goods or services or both in violation of the provisions of the Act, or rules; or

(c) violates section 171 or rules thereunder [Anti Profiteering measure]

[3][(d) violates rule 10A] [i.e. Furnishing Bank A/c Details]

[4][(e) avails ITC in violation of section 16 or the rules made thereunder; or]

[5][(f) furnishes the details of outward supplies in GSTR-1 u/s 37 for one or more tax periods which is in excess of the outward supplies declared by him in his valid return u/s 39 for the said tax periods; or]

[6][(g) violates rule 86B.] [i.e. Restriction on use of ITC available in ECrL]

Question & Answer

1^st Proviso to Section 29(2)

PO shall not cancel the registration without giving the person an opportunity of being heard.

Rule 22(1)

Where PO has reasons to believe that the registration of a person is liable to be cancelled u/s 29,

he shall issue a notice to such person in GST REG-17, requiring him to show cause,

within a period of 7 working days from the date of the service of such notice,

as to why his registration shall not be cancelled.

Rule 22(2)

The reply to the SCN u/sr (1) shall be furnished in REG–18

within 7 days of service of notice.

Rule 22(3)

Where a person who has submitted an application for cancellation of his registration is no longer liable to be registered or his registration is liable to be cancelled,

the PO shall issue an order in GST REG-19, within a period of 30 days from the date of

application submitted u/r 20 or,

the reply to the SCN issued u/sr (1) [7][or u/sr 21A(2A)],

cancel the registration,

wef a date to be determined by him and notify the taxable person,

directing him to pay arrears of any tax, interest or penalty including the amount liable to be paid u/s 29(5)

Rule 22(5)

The provisions of sub-rule (3) shall, mutatis mutandis, apply to the legal heirs of a deceased proprietor, as if the application had been submitted by the proprietor himself.

Rule 22(4)

Where the reply furnished u/sr (2) [8][or in response to the notice issued u/sr 21A(2A)] is found to be satisfactory,

the PO shall drop the proceedings and pass an order in GST REG–20.

[9][1^st Proviso to Rule 22(4)

where the person instead of replying to the notice served u/sr (1) for contravention of the provisions contained in section 29(2)(b) or (c)

furnishes all the pending returns and makes full payment of the tax dues along with applicable interest and late fee,

the PO shall drop the proceedings and pass an order in GST-REG 20.]

Question & Answer

^[10][1^st Proviso to Section 29(1) & 2^nd Proviso to Section 29(2)

During pendency of the proceedings relating to cancellation of registration filed by RP,

registration may be suspended for such period and in such manner as may be prescribed.

Once a RP has applied for cancellation of registration or the PO seeks to cancel his registration,

PO may suspend his registration during pendency of the proceedings relating to cancellation of registration filed.

In this way, a taxpayer is freed from the routine compliances, including filing returns, etc.

^[11][Rule 21A(1)

Where a RP has applied for cancellation of registration u/r 20,

the registration shall be deemed to be suspended from

the date of submission of the application or

the date from which the cancellation is sought,

whichever is later,

pending the completion of proceedings for cancellation of registration u/r 22.

Rule 21A(2)

Where the PO has reasons to believe that the registration of a person is liable to be cancelled u/s 29 or u/r 21,

he may, [12][***], suspend the registration of such person

wef a date to be determined by him, pending the completion of the proceedings for cancellation of registration u/r 22

[13][Rule 21A(2A)

Where, a comparison of the returns furnished by a RP u/s 39 with the details of

(a) outward supplies furnished in GSTR-1; or

(b) inward supplies derived based on the details of outward supplies furnished by his suppliers in their GSTR-1,

or such other analysis, as may be carried out on the recommendations of the Council,

show that there are significant differences or anomalies indicating contravention of the provisions of the Act or rules, leading to cancellation of registration of the said person,

his registration shall be suspended and the said person shall be intimated

in GST REG-31, electronically, or

by sending a communication to his e-mail address,

highlighting the said differences and anomalies and asking him to explain, within a period of 30 days, as to why his registration shall not be cancelled.]

Extracts of Circular No. 145/01/2021 - GST dated 11-02-2021

3.

Registration of specified taxpayers shall be suspended and system generated intimation for suspension and notice for cancellation of registration in GST REG-31, containing the reasons of suspension, shall be sent to such taxpayers on their registered e-mail address.

Till the time functionality for REG-31 is made available on portal, such notice/intimation shall be made available to the taxpayer on their dashboard on common portal in GST REG-17. The taxpayers will be able to view the notice in the “View/Notice and Order” tab post login.

4.

The taxpayers, whose registrations are suspended (“the said person”), would be required to furnish reply to the jurisdictional tax officer within 30 days from the receipt of such notice / intimation, explaining the discrepancies/anomalies, if any, and shall furnish the details of compliances made or/and the reasons as to why their registration shouldn’t be cancelled:

a) The said person would be required to reply to the jurisdictional officer against the notice for cancellation of registration sent to them, in GST REG-18 online through Common Portal withing the time limit of 30 days from the receipt of notice/ intimation.

b) In case the intimation for suspension and notice for cancellation of registration is issued on ground of non -filing of returns, the said person may file all the due returns and submit the response. Similarly, in other scenarios as specified under GST REG-31, they may meet the requirements and submit the reply.

5.1

Post issuance of GST REG-31 via email, the list of such taxpayers would be sent to the concerned Nodal officers of the CBIC/ States. Also, the system generated notice can be viewed by the jurisdictional proper officers on their Dashboard for suitable actions. Upon receipt of reply from the said person or on expiry of thirty days (reply period), a task would be created in the dashboard of the concerned proper officer under “Suo moto cancellation proceeding”.

5.2

Proper officer, post examination of the response received from the said person, may pass an order either for dropping the proceedings for suspension/ cancellation of registration in FORM GST REG-20 or for cancellation of registration in FORM GST REG-19. Based on the action taken by the proper officer, the GSTIN status would be changed to “Active” or “Cancelled Suo-moto” as the case maybe

5.3

Till the time independent functionality for GST REG-31 is fully ready, it is advised that if the proper officer considers it appropriate to drop a proceeding anytime after the issuance of GST REG-31, he may advise the said person to furnish his reply on the common portal in GST REG-18.

5.4

It is advised that in case the proper officer is prima-facie satisfied with the reply of the said person, he may revoke the suspension by passing an order in GST REG-20. Post such revocation, if need be, the proper officer can continue with the detailed verification of the documents and recovery of short payment of tax, if any. Further, in such cases, after detailed verification or otherwise, if the proper officer finds that the registration of the said person is liable for cancellation, he can again initiate the proceeding of cancellation of registration by issuing notice in FORM GST REG-17.

Rule 21A(3)

A RP, whose registration has been suspended u/sr (1) or (2) or (2A),

shall not make any taxable supply during the period of suspension and

shall not be required to furnish any return u/s 39.

^[14][Explanation.-For this sub-rule, “shall not make any taxable supply” shall mean that the RP shall not issue a tax invoice and, accordingly, not charge tax on supplies made by him during the period of suspension.]

Taxpayer would not be allowed to file return for the period after date of cancellation mentioned in the cancellation order. However, he can submit returns of the earlier period.

[15][Rule 21A(3A)

A RP, whose registration has been suspended u/sr (2) or (2A),

shall not be granted any refund u/s 54, during the period of suspension of his registration.]

Rule 21A(4)

The suspension of registration u/sr (1) or (2) or (2A) shall be deemed to be revoked upon completion of the proceedings by the PO u/r 22 and

such revocation shall be effective from the date on which the suspension had come into effect.

[16][Provided that the suspension of registration under this rule may be revoked by the PO, anytime during the pendency of the proceedings for cancellation, if he deems fit.]

[17][2^nd Proviso to Rule 21A(4)

where the registration has been suspended under sub-rule (2A) for contravention of the provisions contained in section 29(2)(b) or (c) and

the registration has not already been cancelled by the proper officer under rule 22,

the suspension of registration shall be deemed to be revoked upon furnishing of all the pending returns]

Where the registration has been suspended u/s 29(2)(b) or (c) due to non-furnishing of return by RP and which has not yet been cancelled by PO,  such suspension shall be deemed to be revoked upon furnishing of all the pending returns by RP. 

^[18][Rule 21A(5)

Where any order having the effect of revocation of suspension of registration has been passed,

the provisions of section 31(3)(a) [Revised Invoice] and 40 [First Return] in respect of the supplies made during the period of suspension and the procedure specified therein shall apply.]

After revocation of suspension, Revised invoice must be issued for the period of suspension.

Question & Answer

Section 29(3)

The cancellation of registration under this section shall not affect the liability of the person to pay tax and other dues under this Act or to discharge any obligation under this Act or the rules made thereunder for any period prior to the date of cancellation whether or not such tax and other dues are determined before or after the date of cancellation.

Ex

The PO cancelled the registration of Naman Associates on 11th Oct.

The tax dues of Naman Associates for July-Sep quarter (determined by PO on 16th Dec) are Rs.50,000.

The cancellation of registration of Naman Associates shall have no effect on his liability of tax dues of Rs.50,000 even though the tax dues are determined after the cancellation of registration.

Section 29(4)

The cancellation of registration under the SGST/UTGST Act

shall be deemed to be a cancellation of registration under this Act.

Section 29(5)

Every registered person whose registration is cancelled

shall pay an amount, by way of debit in the electronic credit ledger or electronic cash ledger, equivalent to

(i) the credit of input tax in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock or capital goods or plant and machinery on the day immediately preceding the date of such cancellation or

(ii) the output tax payable on such goods,

whichever is higher,

calculated in such manner as may be prescribed

Section 29(6)

The amount payable u/ss (5) shall be calculated in such manner as may be prescribed.

Refer para 18.2.2 of guide on section 18 for reversal of ITC/Payment of Tax on Cancellation of Registration

Question & Answer