Any Taxpayer other than composition taxpayer has not filed returns for a continuous period of six months.
Supplies any goods and / or services without issue of any invoice, in violation of the provisions of the Act or rules made thereunder, with the intention to evade tax.
Issues any invoice or bill without supply of goods and/or services in violation of the provisions of this Act, or the rules made thereunder leading to wrongful availment or utilization of input tax credit or refund of tax.
Collects any amount as representing the tax but fails to pay the same to the account of the Central/State Government beyond a period of three months from the date on which such payment becomes due.
Fails to pay any amount of tax, interest or penalty to the account of the Central/State Government beyond a period of three months from the date on which such payment becomes due.
Person is no longer liable to deduct tax at source as per the provisions of GST Law.
Person is no longer liable to collect tax at source as per the provisions of GST Law.
Person no longer required to be registered under provisions of GST Law.
GST Practitioner is found guilty of misconduct in connection with any proceeding under the GST Law.
Discontinuation/Closure of Business.
Change in Constitution leading to change in PAN.
Ceased to be liable to pay tax.
Transfer of business on account of amalgamation, merger/demerger, sale, lease or otherwise disposed of etc.
Death of Sole Proprietor.
Composition person has not furnished returns for three consecutive tax periods.
Registration has been obtained by means of fraud, willful misstatement or suppression of facts. Etc.

How will the taxpayer be informed about Suo Moto Cancellation under GST?

As per section 29(2) of CGST Act, The Proper officer may cancel the registration of a person from such date, including any retrospective date, as he may deem fit, where

(a) A Registered person has contravened such provisions of the Act or the rules made thereunder as may be prescribed; or

(b) a person paying tax under section 10 has not furnished the return for a financial year beyond three months from the due date of furnishing the said return; or

(c) any Registered person, other than a person specified in clause (b), has not furnished returns for such continuous Tax period as may be prescribed; or

(d) Any person who has taken voluntary registration under sub-section (3) of section 25 has not commenced business within six months from the date of registration; or

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

Provided that the Proper officer shall not cancel the registration without giving the person an opportunity of being heard.

It means registration cannot be cancelled without a Show Cause Notice being given to taxpayer and a reasonable opportunity of being heard by the Tax Official. Thus, in case of Suo Moto cancellation of registration, a Show Cause Notice shall be issued by the Tax Official/ Proper officer to the taxpayer and taxpayer would be given a chance to file clarifications in the stipulated time limit.

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

What Effects would the Cancellation of Suo Moto have?

When Suo Moto cancellation has been initiated by the Tax Official, the status of the GSTIN is shown as “Suspended”. This will be changed to “Active” only when Suo Moto cancellation proceeding is dropped, after hearing.

When the status of your GSTIN is showing as “Suspended” status, you can perform certain activities on GST Portal like filing Appeal, making payment, filing for Refunds, reply to Assessment/Recovery/ Enforcement related orders/ notices, even make non-core amendment etc..

After getting a notice of cancellation, what choices does the taxpayer have?

Taxpayer need to provide response within the prescribed time limit of 7 working days’ time to file reply to the Show Cause Notice (SCN) using the Services > Registration > Application for Filing Clarifications link. If no response is given within prescribed 7 working days, the Tax Official can proceed with Cancellation of registration.

To reply to the Show Cause Notice related to Suo Moto Cancellation, Navigate to Services > Registration> Application for Filing Clarifications.

The application is displayed for filing clarification. The reason for cancellation provided by Tax Officer will be displayed in the form. You can enter your Response.

In case the Tax Official is satisfied with the response received from the taxpayer, on the Show Cause Notice issued, the proceedings can be dropped.

Primary Authorized Signatory will be intimated about dropping of SCN by SMS & Email.
Issuance of Order for dropping of SCN will also be intimated to the Primary Authorized Signatory by Email and SMS.
Order will be made available on the taxpayer’s dashboard to view, print and download.
Status of GSTIN will change from “Suspended” to “Active”.

Whereas if the proper officer is not satisfied with response received from the taxpayer, registration can be cancelled by the Tax Authority, the taxpayer will be intimated about the same via SMS and Email. Order for Cancellation of Registration will be issued and intimated to the Primary Authorized Signatory by Email and SMS. Order will be made available on taxpayer’s dashboard to view, print and download.

Taxpayer would not be allowed to file return or upload invoices for the period after date of cancellation mentioned in the cancellation order. Also, GSTP will not be able to carry out GSTP functions for any Taxpayer for the period after the date of cancellation mentioned in the cancellation order.

Taxpayer will not be able to amend registration details after issuance of cancellation order. However, email address and mobile number can be updated till dues/ refund are cleared. The facility to file application for revocation (if applicable) will be open for the Cancelled Registration.

Taxpayer can submit returns of the earlier period (i.e. for the period before date of cancellation mentioned in the cancellation order), after suo moto cancellation of registration. However, you will not be allowed to file return or upload invoices for the period after date of cancellation mentioned in the cancellation order.

Where can taxpayer apply for revocation of cancelled registration?

A taxpayer, whose registration has been cancelled by the tax official, by initiating suo moto proceedings, can apply at GST portal for revocation of cancelled registration.

However, no application for revocation shall be filed if the registration has been cancelled for the failure of the taxable person to furnish returns, unless such returns are filed and any amount due as tax, in terms of such returns has been paid along with any amount payable towards interest, penalties or late fee payable in respect of the said returns.

Once an application for revocation of cancelled registration is approved by the Tax Official, the system generates an approval order and an intimation is sent to the Primary Authorized Signatory of the taxpayer via e-mail and SMS, about the same.

Consequent to the approval of the Application for Revocation of Cancelled Registration, the taxpayer’s GSTIN Status will be changed to from Inactive to Active status with effect from the effective date of cancellation.

Statutory Provision: Right to Appeal under section 107 of CGST Act

In the face of GST registration cancellation, the law provides a window of remediation. According to Section 107 of the CGST Act, 2017, if you’re dissatisfied with the decision of registration cancellation, taxpayer has the right to file an appeal.

An appeal can be lodged with the appellate authority within three months from the date the cancellation order is communicated to you.

The Act acknowledges that there may be legitimate reasons for delay, hence, further extending the appeal window. In exceptional cases, where the appellate authority is convinced of a sufficient cause, it may permit you to present the appeal within an additional month as prescribed under section 107(4) of CGST Act.

What Precautions can be taken by the taxpayer to avoid suo moto cancellation by tax authorities?

Timely filing of GST returns whether quarterly or monthly
Issuance of proper invoices (E-invoice wherever applicable) at the time of supply of goods and services without any violation.
Timely payment of tax, penalty or any other late fee on self-assessment basis.
Avail Input tax credit in terms of the provisions of section 16 of the CGST Act or the rules made thereunder.
Comply with the provision of rule 86B.
Furnishing of Bank Account Details as provided in Rule 10A of CGST Rules.
Make sure to comply with all other provision under GST law violation of which can lead to suo-moto cancellation

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