Incorporation of penal provision in any kind of statute is a mandate to ensure that applicable person make compliance thereof.
Similarly, the Goods and Service Tax (“GST”) law provides for various penal action for non-compliance of GST provisions. One such action is suo-moto cancellation of GST registration and Revocation of GST Cancellation by the proper officer.
1. Cancellation of GST Registration by proper officer
1.1 Grounds of Cancellation of GST 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
1.2 Opportunity of Being heard
As per proviso to Section 29(2), proper officer can’t cancel GST registration without providing taxpayer an opportunity of being heard.
1.3 Communication of 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.
2. Remedy against order of GST Registration cancellation
2.1 Application for revocation of cancellation of GST Registration
Section 30(1) provides an opportunity to taxpayer to apply for revocation of cancellation of GST registation within 30 days from date of service of cancellation order.
2.2 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.
3. Recent GST Amendment/Clarification
Central Board of Indirect Taxes & Customs (“CBIC” or “Department”) has issued following documents in matter of revocation of cancellation of GST registration on 23rd April, 2019:
- Order No. 5/2019-(Extension of time limit for filing of application for revocation of cancellation of registration by specified persons)
- Circular No. 99/18/2019– Clarification regarding filing of application for revocation of cancellation of registration in terms of Removal of Difficulty Order (RoD) number 05/2019
- Notification No. 20/2019-Central Taxes-GST Compliance for the period during which GST Registration is suspended
3.1 Extension of time limit to file application for revocation (Order-5/2019)
A large number of registrations have been cancelled by proper officer due to non-furnishing of return by taxpayer in form GSTR-3B or GSTR-4. Certain registrations were cancelled from date of order of cancellation of registration and certain were cancelled with retrospective effect.
In this matter, department has received representations from various aggrieved persons that their registrations have been cancelled by proper officer due to reasons provided under section 29(2) of CGST Act, 2017 after serving notices under section 169(1)(c) & (d). However, as taxpayers are not familiar with the manner of service of notice by e-mail or making available on online GST portal in comparison to earlier regime where manual notices was provided, therefore, they failed to furnish revocation of cancellation of registration within 30 days and also time for filing appeal u/s 107(1) expired.
Considering such representation, department has allowed to file application for revocation of cancellation of registration upto 22.07.2019 in cases where order for cancellation of registration has been issued upto 31.03.2019 u/s 29(2) and concerned person has failed to file application of revocation within provided time.
3.2 Compliance in case of revocation of cancellation of registration (Notification No. 20/2019)
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.
In such case (restoration of GST Registration), registered person was not having any clarity about filing of GST return for the period during which GST registration was suspended.
3.2.1 Compliance in case of cancellation of GST registration with prospective date
Accordingly, 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.
3.2.2 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.
3.2.3 Illustration
Certain instances of due date of filing of return for the period during which registration was suspended is as follows:
| Return not furnished from | Date of order of cancellation of GST registration | Cancellation of registration effective from | Date of filing of application for revocation of cancellatio n of registration as per RoD (to be filed on or before the 22nd July, 2019) | Returns to be furnished before filing the application for revocation of cancellation of registration | Date of order of revocation of cancellation of registration | Date of furnishing returns for period b/w date of order of cancellation of registration and date of revocation of cancellation of registration (to be filed within thirty days from the date of order of revocation of cancellation of registration) | Returns to be furnished within thirty days from date of order of revocation of cancellation of registration |
| July, 2018 | 01.03.2019 | 01.03.2019 | 30.05.2019 | Return due for filling till 01.03.2019 | 01.06.2019 | 01.07.2019 | Returns due till01.06.2019 (i.e. Feb, 2019 to April, 2019) |
| July, 2018 | 22.03.2019 | 22.09.2019 | 20.06.2019 | Returns due for filling till 22.03.2019 | 22.06.2019 | 22.07.2019 | Returns due till 21st June, 2019 (i.e, March 19 to May, 2019) |
| July, 2018 | 01.03.2019 | 01.07.2019 | 30.05.2019 | NA | 01.06.2019 | 01.07.2019 | Returns due till 1st June, 2019 (i.e., July 18 to April, 2019) |
