Introduction

When a taxpayer registers for Goods and Services Tax (GST), they are given a GSTIN number. GST registration suspension occurs when the central tax authority or the taxpayer wishes to cancel this number. In India, cancellations are handled by the tax officer. Businesses are not permitted to operate following the deletion of their GST number. If they continue to do so, the income-tax authorities will apply severe fines. Once the GSTIN is canceled, the company is no longer required to pay or levy GST. This often denotes a business winding down or a change in the business constitution.

Reasons behind Cancellation/Suspension of GST Registration

For any of the following reasons, the Central Tax Authority or a business owner may choose to cancel GST registration:

The individual is registered under one of the preceding tax laws: Some firms that were registered under the previous tax regime are not required to register for GST. For example, the VAT threshold limit was Rs. 10 lakhs, but the GST threshold limit is Rs. 40 lakhs. As a result, VAT-registered individuals are exempt from GST registration.

Business Discontinuation: If a business ceases operations, the proprietor may apply for GST registration cancellation.

It may also be canceled under the following circumstances:

• When one business organization merges with another
• Transfer of a business in its entirety or in part for any reason, including the death of the proprietor
• Changes to the corporate structure
• If a registered person’s participation in the GST scheme is no longer required. This excludes people who voluntarily registered under Section 25 (3) of the CGST Act.
• If a person registered under the GST composition system fails to file returns for three consecutive months,
• If a person fails to comply with GST laws and provisions, the GST legislation allows for GST cancellation.
• If a registered person fails to complete GST returns for six consecutive months.
• If a person registers their business voluntarily under section 25(3) of the CGST and does not begin operations within 6 months of the registration date
• If GST registration is obtained by fraud, misrepresentation, or suppression of facts

Understanding the suspension of GST registration

When a taxpayer fails to file their GST returns for six consecutive months as a monthly filer or for two consecutive quarters as a quarterly filer, their GST registration or GSTIN may be suspended.

It’s possible that the process to cancel your GST registration is still ongoing. Even so, the suspension can be initiated by the tax official by sending the taxpayer an automatically generated show-cause notice.

Section 29(2) of the CGST Act, when taken together with Rules 21(h) and (i) of the CGST Rules, lays out the requirements or criteria for suspension or cancellation. These conditions or criteria are effective as of October 1, 2022. The proviso to Section 29(2) of the CGST Act, read with Rule 21A of the CGST Rules, governs the suspension of GST registration. GST returns in this instance refer to Form GSTR-3B, notified under Section 39(1) of the CGST Act.

Consequences of GST Registration Suspension

If the GST registration is suspended under Rule 21A(2) – During the period when the GST registration is suspended, the taxpayer cannot-

1. Provide taxable goods and services, issue tax bills, or charge and collect taxes.
2. Fill out GSTR-3B forms for the current months/quarters without providing pending returns for previous periods.
3. Be eligible for GST refunds.

What to do after the Suspension of GST Registration?

If your GST registration has been put on suspended, you need to speak with an assessing officer right away to have your GSTIN activated. Failure to take the necessary action by the deadline may result in the termination of the registration and additional fines for violating GST requirements.

Here are some things to think about if the taxpayer has received a warning but has not voluntarily requested for cancellation of registration:

1. After being informed of a discrepancy – If a taxpayer receives a notice of inconsistencies, he has one month from the date of receipt to provide the tax office with a response. The response should explain why the registration shouldn’t be canceled as well as all the corrective activities and steps taken to address the non-compliances.
2. After getting a cancellation notice – Within one month after receiving the notice, the taxpayer must respond to the tax officer using Form GST Reg 18 online through the official GST portal.
3. Getting a notice for failing to complete returns – The most frequent occurrence is the failure to file returns. The person may file all required returns and submit a response if a notice of suspension or cancellation of registration is issued owing to the non-filing of returns.

How to Activate Suspended GST Registration?

As a taxpayer who has registered, you have 30 days to request the reactivation of your GST registration. But only when the registration is suspended by an authorized GST officer is this possible. Under no circumstances may a registration that has been voluntarily suspended be revoked. There is no denying that the suspension regulations offer some relief to taxpayers.

Although the government has simplified the procedure, it is still advisable to get expert assistance when removing a suspended GST registration. You can avoid major hassles and stay in compliance while receiving potential remedies to deal with the suspension of your GST registration by speaking with a GST expert or a certified CA.

FAQs

• How can a taxpayer voluntarily cancel their GST registration?

A taxpayer can voluntarily cancel their GST registration by filing an application for cancellation through the official GST portal. This option is available when the taxpayer is no longer engaged in taxable activities or does not meet the threshold for GST registration.

• What happens if a taxpayer fails to take necessary action after GST registration suspension?

Failure to take the necessary action by the deadline after GST registration suspension may lead to the termination of the registration and additional fines for non-compliance with GST requirements.

• Can a taxpayer apply for GST registration after voluntarily cancelling it?

Yes, if a taxpayer voluntarily cancels their GST registration and later decides to resume business activities, they can apply for a fresh GST registration. However, the application process and requirements for registration will apply as per the prevailing rules at that time.

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