Can GST Registration Be Canceled Suo-Moto? Understand The Domino Effect.

Cancelling your GST registration is an action that will have a domino effect on the parties associated with your business, and it has reasonable consequences. GST registration is one of the first steps in beginning your GST journey, and cancelling it will bring it to an end. All other sections and rules fall somewhere in the middle of these two actions. 

A GST registration cannot be revoked once it has been issued unless an assessee applies voluntarily against it or a proper officer cancels the registration for some reason. If the proper officer cancels the GST r the GST registration, it will be marked as Suo Moto canceled on the GST portal. If the Tax Officer has already initiated Suo Moto cancellation of a specific GST registration, an application for cancellation of registration cannot be submitted. The article will explain to you all about the cancelation of GST registration and also the things that follow it. 

Suo Moto Cancellation of GST Registration by Proper Officer

Suo moto cancellation of registration might be executed via tax officer for distinct circumstances as specified in the GST law and is mentioned below: 

  1. Issuing any invoice or bill with no supply of goods or services in violation of the provisions of the Act or the regulations promulgated thereunder results in an illegal claim or use of input tax credit or tax refund. 
  2. Any assessee, excluding the composition assessee, fails to submit returns for a continuous period of six months. 
  3. No issuance of notice for revoking the provisions of the act made inside it with the intention of evading the tax. 
  4. Under the GST law, an individual is no longer responsible for collecting tax at the source. 
  5. Failure to file any tax amount, interest, or penalty to the central or state government’s account after a three-month period from the date these payments become due. 
  6. Collects any amount designated as tax while failing to pay it to the account of the Central or State Government for a period of three months from the date the same payment is left. 
  7. The GST practitioner would be found guilty of the misconduct in any proceeding under the GST Law. 
  8. Under the GST law, an individual would no longer be required to deduct tax at source. 
  9. Business Discontinuation/Closure 
  10. Stop being in charge of filing taxes. 
  11. A business transfer based on amalgamation, merger/demerger, sale, lease, or other disposition, among others. 
  12. PAN changes due to constitutional revision 
  13. Registration would be obtained through deception, willful misstatement, or suppression of facts, among other methods. 
  14. Death of Sole Proprietor 
  15. The composition individual did not file the returns for 3 successive tax periods. 

Under all the above-mentioned reasons, the proper officer has the power to issue a show cause notice for your answers and explanations. Such a submission should be made in the prescribed time and in the directed format. 

Suo Moto Cancellation of GST Registration: Removal Order

Suo moto cancellation must have a proper reason, as stated in Section 29(2) of the CGST/SGST Act, and Goods and Service Tax registration cannot be cancelled without issuing a show cause notice to the assessee and providing the assessee with a proper opportunity to be heard via tax officer. In the case of Suo moto cancellation of enrollment, the tax officer will issue a show cause notice to the assessee, and the assessee will be given an opportunity to provide clarifications within the specified time frame. 

To respond to the show cause notice (SCN) issued to the assessee, an answer must be submitted within the specified time period of seven working days via the services > Registration > Application for Filing Clarifications link. If no response is provided within 7 working days, the tax officer may proceed with the revocation of registration. 

If the proper officer is satisfied with the assessee’s response to the show cause notice, the proceedings will be withdrawn, and the assessee will continue to benefit from the existing GSTIN benefits. The order to drop SCN would be communicated to the main Authorized Signatory via SMS and email, and the order copy would be stored on the assessee’s dashboard for viewing, printing, and downloading. As a result, the GSTIN’s status will be changed from “Suspended” to “Active.” 

Officer Canceling Your GST registration

If the proper officer is not satisfied with the submission, he will issue a revocation order for the effective date. Revocation of enrollment under the CGST Act, SGST/UTGST Act, or IGST Act is deemed to be revocation of registration under the SGST Act, UTGST Act, or CGST Act, and vice versa. The assessee can see that by following the below steps: 

Step 1: Go to Services. 

Step 2) Select User Services. 

Step 3) Go to Notices and Orders to see the Suo Moto revocation of registration Show Cause Notice. 

The assessee would be notified via SMS and email if the registration was revoked by the tax authority. Cancellation of the GST Registration order will be issued and communicated to the Primary Authorized Signatory via email and SMS. The Order would be viewable, printable, and downloadable from the taxpayer’s dashboard. 

The GSTIN/UIN/GSTP ID status will be changed from ‘Proceeding for Revocation Started’ to ‘Inactive,’ and the other related Tax Authority will be notified. For the duration following the cancellation date specified in the order of cancellation, the assessee is not permitted to provide the return or upload the invoices. 

Indeed, GSTP would be unable to perform GSTP operations for any assessee for the duration following the cancellation date specified in the order of cancellation. After receiving the cancellation order, the assessee would not be able to revise the registration information. However, the email address and mobile number may be updated until the refunds are processed. Filing the application utility for the revocation (if applicable) will be available for the Cancelled Registration. 

The Domino Effect

  1. GST registration is required for certain businesses. If the GST registration is cancelled and the business continues, it will be considered an offence under GST, with severe penalties. 
  2. The cancellation of registration has no effect on the person’s obligation to pay tax and other dues for any period prior to the date of cancellation, whether determined before or after the date of cancellation. 
  3. Once all tax obligations have been met, the taxpayer will no longer be required to pay GST. 
  4. The ‘no longer taxpayer’ must notify the related parties of the change in GST status, which will affect the parties’ decision to work with the business while keeping the ITC aspect in mind. 
  5. The image of the business will be harmed because the first thought with cancellation is whether the business’s turnover is low, the business is about to close, or the business has violated GST laws. 
  6. The assessee has to file pending returns too. The assessee could access the GST portal and file the return for the previous period (for the duration prior to the date of cancellation specified in the cancellation order). 

How to Reactivate a Cancelled GST Registration via Suo Moto

It is possible that after your GST registration has been cancelled, you will want to reactivate it because you want to restart your business, you have completed the return requirements, or for any other reason. To reclaim your GSTN and activate your GST status, simply follow the steps outlined below: 

Step 1) Go to the GST Portal. 

Step 2) Enter the GST login information. 

Step 3) Go to the Dashboard and select the services. Tap on registration under the services section, and then select the application for revocation of cancelled registration option under the registration section. 

Step 4) Include the revocation reasons and any supporting documentation. (If the GST Registration was cancelled due to non-compliance, the assessee was required to complete the GST Return Filing process.) 

Step 5) Select the authorized signatory and click “Submit.” 

Step 6) The officer will process the order to withdraw the cancellation if he is satisfied with the assessee’s justification. 

Step 7) The corresponding GST officer will revoke the registration within 30 days of the application date. The competent officer should sign an order revoking the GST registration cancellation in FORM GST REG-22. 

Step 8) Once this is completed, the assessee will be considered an active assessee, and all access provided to active taxpayers on the GST Portal will be activated immediately. 

Step 9) According to that, the taxpayer’s registration certificate and profile would be updated. 

Conclusion

Suo moto cancellation of GST registration demonstrates that the assessee is not a GST-registered person, and his GSTIN becomes inactive. Without the GSTIN, the assessee could not pay taxes, claim ITCs, or even acknowledge doing business, which carries much harsher penalties. As a result, cancelling your GST registration will have no effect on the consequences. Recognize the domino effect of everything and make the wise decision to conduct your business legally. 

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