Suo Moto Cancellation of GST Registration

Suo Moto Cancellation of Registration

Meaning of the term “Suo Moto”:

The term “Suo Moto” is a Latin legal term which literally means “on its own motion”. It implies that an action was taken by a group or persons on their own. Hence, when a government entity or a court takes up a matter suo moto, it is taking up the matter “on its own motion” meaning of its own accord or on its own initiative.

Suo Moto cancellation of GST Registration:

  • If a tax payer does not comply with the provisions laid down under Goods and Service Tax, the proper officer is empowered to initiate cancellation of GST registration of such defaulting tax payer.
  • This type of cancellation of registration initiated by proper officer is called suo moto cancellation of registration.

Reason for Suo Moto Cancellation of Registration:

Section 29(2) of Central Goods and Service Tax Act, 2017 (“CGST Act, 2017”) provides for various grounds of suo-moto cancellation of GST registration by proper officer such as:

  • Registered person contravenes provisions of GST Law; or
  • Any person paying tax under composition scheme failed to furnish GST returns for 3 consecutive tax periods;
  • Any registered person, other than person opting to pay tax under composition scheme, fails to file GST return for continuous periods of 6 months;
  • Any person who obtains voluntary registration under GST and not commences his business within 6 months from date of registration; or
  • Registration obtained by means of fraud, willful misstatement or suppression of facts.

Communication Suo Moto Cancellation of GST Registration:

  • As per proviso to Section 29(2), proper officer can’t cancel GST registration without providing taxpayer an opportunity of being heard.
  • Further, as per Section 169(1), before passing order of cancellation of GST Registration, proper officer is required to issue a notice (provide an opportunity of being heard) to the taxpayer.
  • Communication of notice can be made through following ways:
    • By sending communication on his registered email address; or
    • By making available such notice on common GST portal.

Application for Revocation of Cancellation of GST Registration:

  • Section 30(1) provides an opportunity to taxpayer to apply for revocation of cancellation of GST registration within 30 days from date of service of cancellation order.
  • As per Rule 23 of CGST Rules, if proper officer cancels GST registration of any registered person on his own motion then such registered person may apply for revocation of such cancellation in form GST REG-21.

Steps to Submit Application for Revocation:

Following are the steps to be followed to apply for revocation online through the GST Portal:

Steps to Submit Application for Revocation

Action by Proper Officer:

Upon receipt of application for revocation of cancellation of GST Registration, the proper officer may take following action:

(A) Acceptance of Application:

a. When the proper officer is satisfied that the reason being provided for revocation of cancellation of registration is appropriate, then, the officer will revoke the cancellation of registration.
b. On approval by the Tax Official, the system generates an approval order and notification is sent to the applicant, Primary Authorized Signatory of the taxpayer via e-mail and SMS, about the same.
c. Consequent to the approval of the Application for Revocation of Cancelled Registration, the taxpayer’s GSTIN Status will be changed from Inactive to Active status with effect from the effective date of cancellation.

(B) Rejection of Application:

a. When the Tax Official rejects an application for revocation of cancelled registration then the rejection order will be generated.
b. The GSTIN status will remain “Inactive” on the GST Portal, and the Primary Authorized Signatory will be intimated via SMS and email of the rejection of the application.
c. The Rejection Order receipt will be made available on the taxpayer’s dashboard.

Ineligible Applications:

  • Application for Revocation of Cancellation of Registration cannot be filed in folliwng cases:
  • When GST registration was cancelled voluntarily by a taxpayer;
  • By UIN Holders (i.e. UN Bodies, Embassies and Other Notified Persons);
  • By GST Practitioner; or
  • When registration is cancelled on the request legal heir of the taxpayer.

Appeal to Appellate Authority:

  • In addition to above, section 107(1) provides that any person aggrieved by order of any adjudicating authority may file an appeal with appellate authority within 3 months from date of communication of order of GST Registration cancellation.
  • Further, appellate authority may extend such time limit of 3 months by further period of 1 month.

Compliance in case of Cancellation of GST Registration with Prospective Date:

  • The department has notified vide notification no. 20/2019-central taxes that all GST return for such period (i.e., from date of order of cancellation of GST registration till date of order of revocation of cancellation of registration) should be furnished within 30 days from date of order of revocation of cancellation of registration.

Compliance in case of Cancellation of GST Registration with Retrospective Date:

  • Where registration is cancelled with retrospective effect, return filing should be completed for the period from effective date of cancellation of GST Registration till date of order of revocation of cancellation.

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