What is GST Cancellation?
GST Cancellation means that a taxpayer is no longer registered under GST. Once cancelled, the GSTIN becomes inactive, and the business is no longer required to pay or collect GST or file returns.
Cancellation can be initiated by the taxpayer voluntarily or by the GST officer (Suo Moto) due to non-compliance.
Reasons for GST Cancellation
- Discontinuation of Business: Closure of business or death of the sole proprietor.
- Change in Constitution: E.g., a partnership firm changing to a private limited company.
- Turnover Below Threshold: If the annual turnover falls below the mandatory registration limit.
- Non-Filing of Returns: Failure to file returns for a continuous period of 6 months (or 3 quarters for composition dealers).
- Fraudulent Activities: Registration obtained by means of fraud, willful misstatement, or suppression of facts.
- Non-Commencement of Business: Business not started within 6 months of voluntary registration.
What is Revocation of Cancellation?
Revocation of Cancellation means restoring a GST registration that has been cancelled by a GST officer. This applies only when the cancellation was done by the officer on their own motion (Suo Moto) and not when the taxpayer voluntarily cancelled it.
If your GST registration was cancelled due to non-filing of returns, you can apply for revocation after filing all pending returns and paying the due taxes, interest, and penalties.
Process for Revocation of Cancellation
- Rectify the Default: File all pending GST returns and pay all outstanding dues (tax, interest, penalty).
- File Application: Submit Form GST REG-21 on the GST portal within 30 days of receiving the cancellation order.
- Officer's Review: The GST officer reviews the application. If satisfied, they will revoke the cancellation using Form GST REG-22 within 30 days.
- Show Cause Notice: If the officer is not satisfied, they may issue a notice in Form GST REG-23.
- Reply to Notice: You must reply to the notice in Form GST REG-24 within 7 working days.
- Final Order: The officer will pass a final order in Form GST REG-05 (rejection) or Form GST REG-22 (approval).
Important Timelines
- Application for Revocation: Within 30 days from the date of service of the cancellation order. This can be extended by the Joint/Additional Commissioner for another 30 days, and further by the Commissioner for another 30 days.
- Officer's Response: The officer must issue an order or notice within 30 days of receiving the application.
- Reply to Notice: The taxpayer must reply within 7 working days.
