Section 29 of the Central Goods and Services Tax Act, 2017has laid down various grounds for cancellation or suspension of GST Registration. Cancellation of GST Registration indicates that the Taxpayer is no longer registered with the GST Regime, neither is he liable to claim Input Tax Credit for a valid supply of goods and services nor is he required to file annual GST returns or compliances. Reasons for suspension of GST Registration can be both either statutory cancellation by the government or voluntary suspension by the Taxpayer.
The CGST Rules, 2019 introduced rule 21A in the Act, which enables taxpayers to postpone their GST return filing. With the new rule, a taxpayer who has applied for cancellation of GST Registration shall not be required to comply with GST return filing during the period of suspension.
Reasons for Suspension of GST Registration
The CGST Act and Rules have mentioned the reasons for which the Suspension of GST Registration can be invoked by the regulatory authorities. The reasons are –
1. Failure to File GST Returns
Failure to furnish GST returns or failure to file returns for three consecutive tax periods by a registered person other than a person paying the composition levy.
2. Delay in Payment of GST returns or timely reporting
Delay in payment of GST returns or reporting to authorities can result in Suspension or Cancellation of GST Registration.
3. Inadequate and/or Fraudulent record keeping
If the Taxpayer has not provided the correct records, data or returns to the statutory authorities or has not maintained records with themselves, he/she shall face the consequences. Apart from the Suspension of GST Registration, the Taxpayer can also face penal implications such as imprisonment and fines.
4. Indulgence in Fraudulent Activities
A taxpayer cannot claim input tax credits or his GST registration will be suspended, if he engages in any fraudulent activities, such as issuing fake invoices, claiming input-tax credit on invalid purchases, GST Evasion, etc.
5. Discontinuation of the businesses
If the business has to be discontinued for any reason, such as death, insolvency, incapacity of the owner, merger, amalgamation, or liquidation of the business itself, it leads to the cancellation of GST Registration.
6. Non-commencement of the business
Once the taxable person has received a certificate of registration from the authorised officials, they are required to mandatorily commence business operations within six months from the grant of such authorisation. If not commenced within six months, then the GST registration is suspended or cancelled.
7. Registration obtained by means of fraud, willful deceit or suppression of facts.
If it is proved that the applicant has obtained the GST Registration through any unfair means or suppression of material facts, the GST Registration shall stand cancelled.
Consequences of Cancellation of GST Registration
Suspension of GST Registration can lead to a number of consequences that can adversely affect a business as well as the Taxpayer. These consequences are –
1. Unable to Pay returns and Collect GST
Upon suspension of GST registration, the taxpayer would neither be able to collect GST or input tax credit from customers nor be eligible to pay annual GST returns.
2. Legal implications and penalties
If a GST registration is cancelled due to any violation of any law or regulation by the taxpayer, such breach can result in legal implications such as imprisonment or fines for both the taxpayer and the business.
3. Additional Fees for Reapplication
Once a valid GST registration has been cancelled or suspended by the authorities, the Taxpayer would have to re-apply for a new GST registration by following the requisite procedure and paying fees.
4. Harms Credibility of the Product in the Market
Once there is a cancellation of GST registration, the taxpayer and the business might face considerable damage and harm to the reputation of the business. Hence, the suspension of GST Registration is considered a serious economic setback for any business.
How to Revoke Suspension of GST Registration
Once a GST Registration has been suspended or cancelled by the Authorities, the same can be revoked by following a procedure for making an application for revocation of GST cancellation. The applicant can make an application both through an online portal or through a physical application. The Taxpayer must inform the authorities within a period of 30 days from the service of cancellation notice, giving a reason why the registration should not be cancelled. The process to be followed for revocation of GST Registration Cancellation is –
Step -1 Login on the GST Portal
The Taxpayer must apply for a GST revocation form by visiting the GST Portal. The applicant must fill in the username and password to log into the portal. Once the account has been created and the details are filled out, the applicant must select the services tab on the home page.
Step -2 Submission of Application
The Taxpayer must first file an application for revocation of Suspension of GST Registration.
In form GST REG -31 through the GST Portal within 30 days from the cancellation of GST Registration.
Step -3 Scrutiny of Application
An officially authorised approved officer is required to overturn the registration cancellation on the basis of legitimate grounds. The officer has 30 days from the date of application receipt to reply using Form GST REG-22. All information on the cancellation or revocation of registration must be recorded in writing by the official.
Step -4 Decision on the Application
The authorised official must make a decision on the application within a period of 30 days of receiving the application for revocation of Suspension of GST Registration. Such a decision must be communicated to the applicant in from GST REG -21.
Step -5 Grant or Refusal on the Application
If the officer is not satisfied with the application, they must communicate the rejection of the application for revocation of Suspension of GST Registration in from GST REG -23. The applicant can reply with a suitable response to the decision within seven days in from GST REG 24.
However, if the adjudicating officer feels that the grounds mentioned in the application are sufficient to grant a certificate for revocation of Cancellation of GST Registration, they grant the certificate in from GST REG 22.
Conclusion
The authorities for indirect taxation in India have the power to initiate Suspension of GST Registration if they have reasons to believe that the Taxpayer has created any discrepancy or has defrauded the tax system in any way or simply because the business fails to satisfy the minimum eligibility requirement as laid down the CGST Act, 2017. Once a GST Registration has been cancelled, it is a very tedious task to re-apply and obtain the registration once again. Prospectively, the best possible approach would be to not allow a cancellation in the first place. However, if the same has been ordered against a taxpayer, they must proceed with the process of revocation of GST Registration by filing requisite forms on the GST Portal, replying to the queries for the GST authorities and obtaining authorisation for revocation of Suspension of GST Registration.
This process would require seasoned professionals who have knowledge of the insides ofthe Indian Tax System. Corpbiz is a known name in Tax advisory, GST registration and compliance management systems provider. Our services can help you cut down on time and revoke the suspension of your GST registration.
Frequently Asked Questions (FAQs)
How can GST Registration be suspended?
Section 29 of the Central Goods and Services Tax Act, 2017has laid down various grounds for cancellation or suspension of GST Registration. Reasons for suspension of GST Registration can be both either statutory cancellation by the government due to unfair means of registration, fraud or incapacity of the owner or voluntary suspension by the Taxpayer.
Can a taxpayer claim an Input Tax Credit without having a GST registration?
No, in order to claim input tax credit, the taxpayer must have a valid GST tax registration.
How can I revoke the Suspension of GST Registration?
In order to revoke the suspension of GST registration, the applicant must file an application for revocation of GST Registration on the GST Portal.
Is there a time limit to file for Revocation of Suspension of GST Registration?
Yes, the taxpayer must file for revocation or suspension of GST Registration within 30 days from the date of cancellation of GST Registration.
What is the reason for the suspension of GST registration?
There can be several reasons for the suspension of GST Registration, such as failure to file GST Returns, delay in payment of GST returns or timely reporting, fraudulent record keeping, discontinuation of business or voluntary cancellation by the taxpayer.
What is the reason for the cancellation of GST registration by the taxpayer?
The taxpayer might cancel GST registration voluntarily on the grounds of death, incapacity, winding up or liquidation or merger /amalgamation of the business of the taxpayer.
How do I know the reason for the rejection of GST registration?
You can find out the reason for the rejection of GST registration by checking the status on the GST Portal and entering the (ARN) Acknowledgement Reference Number. The portal will display the entire summary of events which led to the rejection of GST Registration.
How do I know if my GST is active or suspended?
In order to check the status of the GST registration number and confirm whether the same is active or suspended, the user must log in to the GST Portal and click on the Services Tab. There, you’ll be able to see the GST Registration as active or cancelled.
How do I resolve a suspended GST registration?
The first step towards resolving a suspended GST registration is to make an application for revocation of the Suspension of GST Registration within 30 days of the cancellation of the suspension of GST Registration. After submission of the application, the tax authorities would scrutinize the application and based on the details of the application, if they are satisfied with the submission, they would revoke the suspended GST Registration.
Can a company cancel GST registration?
Yes, a company can cancel GST Registration voluntarily by making an application to the tax authorities. After cancellation of the GST Registration, the Company or taxpayer will not be able to claim input tax credit or collect GST.
