What is Suo Moto Cancellation of Registration under GST?

According to Section 25 of the Central Goods and Services Tax (CGST) Act, 2017, if the taxpayer is liable to register under the act but fails to do so. Then the GST officer can start a Suo moto registration in GST. As it is an important method for tax officials to enforce the GST registration. 

For example: you run a small food restaurant and one day the GST officers come into your restaurant. They feel that you must have a registration, so they take the initiative to register your businesses. Because you did not register it by yourself to the GST authority. This is basically when the authorities saw that a business was operating under their rules. 

The Suo Moto registration benefits as no hidden taxes, easier business, and confidence of customers in your brand. But there are some drawbacks to it, if you do not keep the proper records or follow the rules, the authorities can charge penalties or fines. 

What is Suo Moto Cancellation?

The cancellation of suo moto registration means that the officer has cancelled the register under GST laws on his motion. The provisions of Section 29 (2) of the CGST Act make it mandatory for officers to provide the reasons for initiating the suo moto cancellation for registration. 

The reason must be a valid point for the initiation of the proceeding for Suo moto cancellation as specified under Section 29 (2) of the CGST/SGST Act. 

The taxpayer's registration cannot be cancelled without a Show Cause Notice or by allowing being heard by the Tax Official. In the Suo Moto cancellation, a Show Cause Notice must be issued by the Tax Official/ Proper officer to the taxpayer. However, the taxpayer will given a chance to file clarifications within the stipulated time limit.

Reasons for Cancellation of GST Registration Through Suo Moto

The Suo Moto registration is cancelled by the tax officer for different circumstances as specified in the GST law. The reasons for cancellation are mentioned below:

• The taxpayer has registered the business through fraud, suppression or misrepresentation of facts.
• The business fails to file the GST returns for a consecutive period of six months. The criteria is three months in the case of a composition taxpayer.
• The taxpayer has failed to apply for GST enrolment within 90 days from the appointed date or any extended date.
• In case the taxpayer is included in the supply of goods or services without the issue of an invoice. It is a violation of provisions of the CGST Act to reduce the taxes.
• If the taxpayer issues a fake GST invoice without a supply of goods or services. They are violating the provisions of the Act to evade input tax credit or get a GST refund of tax.
• Fails to deposit the taxes with the treasury department within 90 days.
• Fails to pay taxes, interest or penalty to the government within 90 days.
• Any misconduct during the proceedings under the GST Act.
• Transfer of business on account of amalgamation, transfer/demerger, sale, lease or otherwise disposed of etc.
• Death of Sole Proprietor.
• Change in Constitution leading to a change in PAN.
• Ceased to be liable to pay tax.
• The composition person has not furnished returns for three consecutive tax periods,
• If the business is discontinued or closed because of any event.

What Happens After Suo Moto Cancellation?

• Once the tax authority cancels the registration, it will be shared with the taxpayer through SMS or Email. The process of cancellation will be handled by the Primary Authorised Signatory through Email or SMS.
• The order will be available on the taxpayer’s dashboard to view, print and download.
• The status of GSTIN/ UIN/ GSTP ID from ‘Proceeding for Cancellation Initiated’ to ‘Inactive’ will be shared with the other concerned Tax authorities.
• After the cancellation of the GST registration, the taxpayer is not allowed to file a return or upload the invoices. However, the Goods and Service Tax Practitioner (GSTP) cannot carry the GSTP functions for any taxpayer after the cancellation order.
• The taxpayer cannot amend registration details after the issuance of the cancellation order. The facility to apply for revocation will open for the cancelled registration only.

What is the Effective Date of Suspension? 

• If a taxpayer applies for cancellation of registration then the date of suspension will be the date on which cancellation application was filed.
• In case, the Suo Moto cancellation is initiated by the tax official, the date of suspension will be the date on which notice for cancellation of registration (Form GST REG-17) is issued.

Note: After your status of GSTIN is changed from “Suspended” to “Active”, you can again treated as an Actice taxpayer.

Conclusion

To conclude, there must be a valid reason for cancelling the Suo Moto registration as specified under Section 29 (2) of the CGST/SGST Act. Any liability before the date of suo moto cancellation will be paid by the taxpayer. The liability can be recovered later on even after the cancellation of GSTIN.

If you are looking to reactivate your cancelled GST registration, then reach out to Registrationwala. We help you in filing a re-application and follow-up with the GST authority.

Author: Dushyant Sharma

Hey there, I'm Dushyant Sharma. With the extensive knowledge I've gained in past 8 years, I have been creating content on various subjects such as banking, insurance, telecom, and all the important registration and licensing processes for various companies. I'm here to help everyone with my expertise in these areas through my articles.