Guidelines and Conditions for Cancelling GST Registration in India

India's Goods and Services Tax (GST) system allows for the cancellation of GST registrations under specific conditions. This article aims to provide a comprehensive guide on the circumstances and procedures for cancelling your GST registration. Understanding these details is crucial to avoid penalties and ensure compliance with tax regulations.

When Can GST Registration be Cancelled?

There are several scenarios where a GST registration can be cancelled. These situations primarily arise when a business stops operations, changes its legal structure, or ceases to be liable for GST payments. Additionally, if the business turnover falls below the prescribed threshold limit or it no longer conducts any taxable supplies, cancellation of registration may be possible.

Specific Reasons for Cancellation

Cessation of Business Operations: If a business stops its daily operations, it can apply for cancellation of its GST registration. Change in Business Structure: Alterations in the legal structure of the business, which may impact its GST obligations, can lead to cancelation. Low Turnover: When the business turnover falls below the statutory threshold limit, the cancellation process may be initiated. No Taxable Supplies: If the business no longer engages in activities that are subject to GST, cancellation can occur.

Procedures for Cancellation

The process of cancelling GST registration needs to be initiated promptly to avoid any penalties or non-compliance issues. If the cancellation is voluntary, the business owner can apply directly. Alternatively, the tax department may cancel the registration if the criteria are met. In cases of bereavement or incapacitation, legal heirs may also apply for cancellation.

Recent Updates and Discretionary Cancellation

As per the latest updates as of 22nd December 2020, the GST registration can be cancelled at the discretion of the tax officer under CGST Rule 21 in the following circumstances:

Excess Input Tax Credit: Using more input tax credit than allowed under section 16 of the Act. Excess ITC Utilization: Utilizing ITC from an electronic credit ledger to settle over 99% of a taxpayer's tax obligations when the gross taxable value of supplies exceeds Rs. 50 lakh in a given year (some exceptions apply). Non-Filing of GSTR-1: Not filing GSTR-1 due to GSTR-3B not being filed for more than two consecutive months (or one quarter for QRMP scheme participants).

Another condition under CGST Rule 21A involves the suspension of GST registration if there are significant discrepancies between GSTR-3B and GSTR-1 and GSTR-2B. However, practically, the cancellation is also pursued for non-attendance at physical hearings even during the pandemic and violations related to incorrect invoicing and input tax credit utilization.

Seeking Expert Assistance

For detailed guidance and legal assistance in cancelling your GST registration, consult tax experts or legal advisors. For immediate support with such issues, reach out to or Ravi Somani 9033024545. If you face challenges in navigating these processes, filing a writ petition might be the best option for justice.