Section 29 proves that in which circumstances, registration may be cancelled or suspended or cancellation proceedings may be dropped.

Section 29(1)

PO may,

either on his own motion or

on an application filed by RP or by his legal heirs, in case of death of RP,

cancel the registration,

in such manner and within such period as may be prescribed,

Section 29(1)

In following circumstances, PO may cancel the registration on an application filed by the RP or by his legal heirs, in case of death of RP

(a) the business has been

discontinued,

transferred fully for any reason including death of the proprietor,

amalgamated with other legal entity,

demerged or

otherwise disposed of; or

(b) there is any change in the constitution of the business; or

[1][(c) the taxable person

is no longer liable to be registered u/s 22 or 24 or

intends to opt out of the voluntary registration obtained u/s 25(3)]

Circumstances when application for cancellation of registration in GST REG-16

a taxpayer can apply for cancellation of registration in GST REG-16 in the following circumstances:

a. Discontinuance of business or closure of business;

b. Transfer of business on account of amalgamation, merger, de-merger, sale, lease or otherwise;

c. Change in constitution of business leading to change in PAN;

d. Taxable person (including those who have taken voluntary registration) is no longer liable to be registered under GST;

e. Death of sole proprietor;

f. Any other reason (to be specified in the application).

Question & Answer

Rule 20

A RP, other than a person to whom registration/UIN granted u/r 12 or 17,

seeking cancellation of his registration u/ss 29(1)

shall submit an application in GST REG-16,

may furnish, along with the application, relevant documents in support thereof,

within a period of 30 days of the occurrence of the event warranting the cancellation:        

Stock and other details required in REG-16

REG-16 shall include the details of

inputs held in stock or

inputs contained in semi-finished or finished goods held in stock and

capital goods held in stock

on the date from which the cancellation of registration is sought, liability thereon, the details of the payment, if any, made against such liability

Circular No. 69/43/2018 - GST dated 26-10-2018

3.

As per Rule 20 cancellation application must be submitted within a period of 30 days of the occurrence of the event warranting the cancellation

The Circular clarified that in cases where it is difficult to exactly identify or pinpoint the day on which such an event occurs.

For instance, a business may be transferred/disposed over a period of time in a piece meal fashion.

In such cases, the 30-day deadline may be liberally interpreted and the taxpayers‟ application for cancellation of registration may not be rejected because of the possible violation of the deadline

5

Since the cancellation of registration has no effect on the liability of the taxpayer for any acts of commission/omission committed before or after the date of cancellation,

proper officer should accept all such applications within a period of 30 days from the date of filing the application, except in the following circumstances:

a) The application in GST REG-16 is incomplete, i.e. where all the relevant particulars, as detailed in para 4 above, have not been entered;

b) In case of transfer, merger or amalgamation of business, the new entity in which the applicant proposes to amalgamate or merge has not got registered with the tax authority before submission of the application for cancellation.

order for cancellation should be issued in GST REG-19 with the effective date of cancellation being the same as the date from which the applicant has sought cancellation in FORM GST REG-16. In any case the effective date cannot be a date earlier to the date of application for the same.

Section 29(2) read with Rule 21

PO may cancel the registration of a person from such date, including any retrospective date, as he may deem fit, where,–

(a) a RP has contravened such provisions of the Act or the rules made thereunder as prescribed in Rule 21; i.e

If the said person

(a) does not conduct any business from the declared place of business; or

(b) issues invoice or bill without supply of goods or services or both in violation of the provisions of the Act, or rules; or

(c) violates section 171 or rules thereunder [Anti Profiteering measure]

[2][(d) violates rule 10A] [i.e. Furnishing Bank A/c Details]

[3][(e) avails ITC in violation of section 16 or the rules made thereunder; or]

[4][(f) furnishes the details of outward supplies in GSTR-1/1A u/s 37 for one or more tax periods which is in excess of the outward supplies declared in his GSTR-3B u/s 39 for the said tax periods; or]

[5][(g) violates rule 86B.] [i.e. Restriction on use of ITC available in ECrL]

[6][(ga) violates the provisions of third or fourth proviso to 23(1); [Failure to furnish pending return after revocation of COR]

[7][(h) has not furnished returns u/s 39(1) for a continuous period of six months for each month of part thereof]

[8][(i) has not furnished returns under proviso to section 39(1) for a continuous period of two tax periods for each quarter or part thereof.]

(b) a Composition Dealer has not furnished [9][the return for a FY beyond 3 months from its due date]; or

(c) any RP, other than composition dealer), has not furnished returns for [10][such continuous tax period as may be prescribed]; or

(d) any person who has taken voluntary registration u/s 25(3) has not commenced business within 6 months from the date of registration; or

(e) registration has been obtained by means of fraud, wilful misstatement or suppression of facts:

Question & Answer

1^st Proviso to Section 29(2)

PO shall not cancel the registration without giving the person an opportunity of being heard.

Rule 22(1)

Where PO has reasons to believe that the registration of a person is liable to be cancelled u/s 29,

he shall issue a notice to such person in GST REG-17, requiring him to show cause,

within a period of 7 working days from the date of the service of such notice,

as to why his registration shall not be cancelled.

Rule 22(2)

The reply to the SCN shall be furnished in REG–18

within 7 days of service of notice.

Rule 22(3)

Where a person who has submitted an application for cancellation of his registration is no longer liable to be registered or his registration is liable to be cancelled,

the PO shall issue an order of cancellation of registration in GST REG-19, within a period of 30 days from the date of

application submitted u/r 20 or,

the reply to the SCN issued u/sr (1) [11][or u/sr 21A(2A)],

wef a date to be determined by him and notify the taxable person,

directing him to pay arrears of any tax, interest or penalty including the amount liable to be paid u/s 29(5)

Rule 22(5)

The provisions of sub-rule (3) shall, mutatis mutandis, apply to the legal heirs of a deceased proprietor, as if the application had been submitted by the proprietor himself.

Rule 22(4)

Where the reply furnished

u/sr (2) [12][or

in response to the notice issued u/sr 21A(2A)]

is found to be satisfactory,

the PO shall drop the proceedings and pass an order in GST REG–20.

[13][1^st Proviso to Rule 22(4)

where the person

instead of replying to the notice served u/sr (1) for contravention of the provisions contained in section 29(2)(b) or (c)

furnishes all the pending returns and makes full payment of the tax, interest and late fee,

the PO shall drop the proceedings and pass an order in GST-REG 20.]

Question & Answer

^[14][1^st Proviso to Section 29(1) read with ^[15][Rule 21A(1)

Where a RP has applied for cancellation of registration u/r 20,

the registration shall be deemed to be suspended from

the date of submission of the application or

the date from which the cancellation is sought,

whichever is later,

pending the completion of proceedings for cancellation of registration u/r 22.

Example

2^nd Proviso to Section 29(2) read with Rule 21A(2)

Where the PO has reasons to believe that the registration of a person is liable to be cancelled u/s 29 or u/r 21,

he may, [16][***], suspend the registration of such person

wef a date to be determined by him,

pending the completion of the proceedings for cancellation of registration u/r 22

[17][Rule 21A(2A)

Where,-

(a) a comparison of the returns furnished by a RP u/s 39 with

the details of outward supplies furnished in GSTR-1/ 1A, or

the details of inward supplies derived based on the details of outward supplies furnished by his suppliers in their GSTR-1/1A, or

such other analysis, as may be carried out on the recommendations of the Council,

show that there are significant differences or anomalies indicating contravention of the provisions of the Act or the rules made thereunder, leading to cancellation of registration of the said person, or

(b) there is a contravention of the provisions of rule 10A by RP,

the registration of such person shall be suspended and the said person shall be intimated in GST REG-31,

electronically, on the common portal, or

by sending a communication to his registered e-mail address,

highlighting the said differences, anomalies or non-compliances and asking him to explain, within a period of 30 days, as to why his registration shall not be cancelled.]

Refer Circular No. 145/01/2021 - GST dated 11-02-2021

Rule 21A(3)

A RP, whose registration has been suspended u/sr (1) or (2) or (2A),

shall not make any taxable supply during the period of suspension and

shall not be required to furnish any return u/s 39.

Taxpayer would not be allowed to file return for the period after date of cancellation mentioned in the cancellation order. However, he can submit returns of the earlier period.

^[18][Explanation to Rule 21A(3)

For this sub-rule, “shall not make any taxable supply” shall mean that

the RP shall not issue a tax invoice and, accordingly, not charge tax on supplies made by him during the period of suspension.]

[19][Rule 21A(3A)

A RP, whose registration has been suspended u/sr (2) or (2A),

shall not be granted any refund u/s 54, during the period of suspension of his registration.]

Rule 21A(4)

The suspension of registration u/sr (1) or (2) or (2A)

shall be deemed to be revoked upon completion of the proceedings by the PO u/r 22 and

such revocation shall be effective from the date on which the suspension had come into effect.

[20][1^st Proviso to Rule 21A(4)

suspension of registration under this rule may be revoked by the PO,

anytime during the pendency of the proceedings for cancellation, if he deems fit.]

[21][2^nd Proviso to Rule 21A(4)

where the registration has been suspended u/sr (2A) for contravention of the provisions contained in section 29(2)(b) or (c) and

the registration has not already been cancelled by the PO u/r 22,

the suspension of registration shall be deemed to be revoked upon furnishing of all the pending returns]

Where the registration has been suspended u/s 29(2)(b) or (c) due to non-furnishing of return by RP and which has not yet been cancelled by PO,  such suspension shall be deemed to be revoked upon furnishing of all the pending returns by RP. 

[22][3^rd Proviso to Rule 21A(4)

Provided also that where the registration has been suspended u/sr rule (2A) for contravention of provisions of rule 10A and

the registration has not already been cancelled by the PO u/r 22,

the suspension of registration shall be deemed to be revoked upon compliance with the provisions of rule 10A]

^[23][Rule 21A(5)

Where any order for revocation of suspension of registration has been passed,

the provisions of section

31(3)(a) [Revised Invoice] and

40 [First Return]

in respect of the supplies made during the period of suspension and the procedure specified therein shall apply.]

After revocation of suspension, Revised invoice must be issued for the period of suspension.

Question & Answer

Section 29(3)

The cancellation of registration under this section shall not affect the liability of the person to pay tax and other dues under this Act or to discharge any obligation under this Act or the rules made thereunder

for any period prior to the date of cancellation

whether or not such tax and other dues are determined before or after the date of cancellation.

Ex

The PO cancelled the registration of Naman Associates on 11th Oct.

The tax dues of Naman Associates for July-Sep quarter (determined by PO on 16th Dec) are Rs.50,000.

The cancellation of registration of Naman Associates shall have no effect on his liability of tax dues of Rs.50,000 even though the tax dues are determined after the cancellation of registration.

Section 29(4)

The cancellation of registration under the SGST/UTGST Act

shall be deemed to be a cancellation of registration under this Act.

Section 29(5)

Every RP whose registration is cancelled

shall pay an amount, by way of debit in the e-credit ledger or e-cash ledger,

equivalent to the credit of input tax in respect of

inputs held in stock and inputs contained in semi-finished or finished goods held in stock or

capital goods or plant and machinery

on the day immediately preceding the date of such cancellation or

(ii) the output tax payable on such goods,

whichever is higher,

calculated in such manner as may be prescribed

Proviso - Calculation of Tax on Capital Goods or P&M

in case of Capital goods or plant & machinery, taxable person shall pay an amount equal to

(i) ITC taken on the such goods (-) 5 % points as prescribed in rule 44 or

(ii) tax on transaction value of such goods u/s 15

whichever is higher.

Section 29(6)

The amount payable u/ss (5) shall be calculated in such manner as may be prescribed.

Refer para 18.2.2 of guide on section 18 for reversal of ITC/Payment of Tax on Cancellation of Registration

Question & Answer