CBIC issues Clarification on Processing of Applications for Cancellation of Registration submitted in FORM GST REG-16

Oct 29, 2018 | by Avantis RegTech Legal Research Team


The Central Board of Indirect Taxes and Customs (CBIC), on receiving representations seeking clarifications on various issues in relation to processing of the applications for cancellation of registration filed by taxpayers in FORM GST REG-16 and in order to clarify the issues and to ensure uniformity in the implementation of the provisions of law across the field formations, has clarified the issues as detailed hereunder:

·         Section 29 of the Central Goods and Services Tax Act,2017 read with Rule 20 of the Central Goods and Services Tax Rules, 2017 provides that a taxpayer can apply for cancellation of registration in FORM GST REG-16 on the common portal within a period of 30 days of the ‘occurrence of the event warranting the cancellation’ 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).

 

·   While initiating the application for cancellation of registration in FORM GST REG-16, the Common portal captures the following information which has to be mandatorily filled in by the applicant:

a)      Address for future correspondence with mobile number and email address;

b)      Reason for cancellation;

c)       Date from which cancellation is sought;

d)      Details of the value and the input tax/tax payable on the stock of inputs, inputs contained in semi-finished goods, inputs contained in finished goods, stock of capital goods/plant and machinery;

e)      In case of transfer, merger of business, etc., particulars of registration of the entity in which the existing unit has been merged, amalgamated, or transferred (including the copy of the order of the High Court / transfer deed);

f)       Details of the last return filed by the taxpayer along with the ARN of such return filed. 

On successful submission of the cancellation application, the same appears on the dashboard of the jurisdictional officer.

 

·         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, theproper 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 FORM GST REG-16 is incomplete, i.e. where all the relevant particulars, 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.

 

·         In situations referred to in (a) or (b) in para above, the proper officer shall inform the applicant in writing about the nature of the discrepancy and give a time period of seven working days to the taxpayer, from the date of receipt of the said letter, to reply. If no reply is received within the specified period of seven working days, the proper officer may reject the application on the system, after giving the applicant an opportunity to be heard, recording reasons for rejection in the dialog box that opens once the ‘Reject’ button is chosen. If reply to the query is received and the same on examination is found satisfactory, the Proper Officer may approve the application for cancellation and proceed to cancel the registration by issuing an order in FORM GST REG-19. If reply to the query is found to be not satisfactory, the Proper Officer may reject the application for cancellation on the system, after giving the applicant an opportunity to be heard. The Proper Officer must also record his reasons for rejection of the application in the dialog box that opens when the ‘Reject’ button is chosen.

 

·         It may be noted that the last date for furnishing of FORM GSTR-10 by those taxpayers whose registration has been cancelled onor before September 30, 2018 has been extended till December 31, 2018 vide Notification No. 58/2018 – Central Tax dated October 26, 2018.

 

·         Further, sub-section (5) of section 29 of the Central Goods and Services Tax Act, 2017 read with rule 20 of the Central Goods and Services TaxRules, 2017 states that the taxpayer seeking cancellation of registration shall have to pay, by way of debiting either the electronic credit or cash ledger, the input tax contained in the stock of inputs, semi-finished goods, finished goods and capital goods or the output tax payable on such goods, whichever is higher. For the purpose of this calculation, the stock of inputs, semi-finished goods, finished goods and capital goods shall be taken as on the day immediately preceding the date with effect from which the cancellation has been ordered by the proper officer i.e. the date of cancellation of registration. However, it is clarified that this requirement to debit the electronic credit and/or cash ledger by suitable amounts should not be a prerequisite for applying for cancellation of registration. This can also be done at the time of submission of final return in FORM GSTR-10. In any case, once the taxpayer submits the application for cancellation of his/her registration from a specified date, he/she will not be able to utilize any remaining balances in his/her electronic credit/cash ledgers from the said date except for discharging liabilities under GST Act upto the date of filing of final return in FORM GSTR-10. Therefore, the requirement to reverse the balance in the electronic credit ledger is automatically met. In case it is later determined that the output tax liability of the taxpayer, as determined under sub-section (5) of section 29 of the Central Goods and Services TaxAct, 2017 was greater than the amount of input tax credit available, then the difference shall be paid by him/her in cash.

 

·         In case the final return in FORM GSTR-10 is not filed within the stipulated date, then notice in FORM GSTR-3A has to be issued to the taxpayer. If the taxpayer still fails to file the final return within 15 days of the receipt of notice in FORM GSTR-3A, then an assessment order in FORM GST ASMT-13 under section 62 of the Central Goods and Services Tax Act, 2017 read with rule 100 of the Central Goods and Services TaxRules, 2017 shall have to be issued to determine the liability of the taxpayer under sub-section (5) of section 29 on the basis of information available with the proper officer. If the taxpayer files the final return within 30 days of the date of service of the order in FORM GST ASMT-13, then the said order shall be deemed to have been withdrawn. However, the liability for payment of interest and late fee shall continue.

 

·         Rule 68 of the Central Goods and Services TaxRules, 2017 requires issuance of notices to registered persons who fail to furnish returns under section 39 (FORM GSTR-1, FORM GSTR-3B and FORM GSTR-4), section 44 (Annual Return – FORM GSTR-9 / FORM GSTR-9A / FORM GSTR-9C), section 45 (Final Return – FORM GSTR-10) or section 52 (TCS Return – FORM GSTR-6). It is clarified that issuance of notice would not be required for registered persons who have not made any taxable supplies during the intervening period (i.e. from the date of registration to the date of application for cancellation of registration) and has furnished an undertaking to this effect.

 

·         It is pertinent to mention that section 29 of the Central Goods and Services TaxAct, 2017 has been amended by the Central Goods and Services Tax(Amendment) Act, 2018 to provide for “Suspension” of registration. The intent of the said amendment is to ensure that a taxpayer is free from the routine compliances, including filing returns, under GST Act during the pendency of the proceedings related to cancellation. Although the provisions of Central Goods and Services Tax(Amendment) Act, 2018 have not yet been brought into force, it will be prudent for the field formations not to issue notices for non-filing of return for taxpayers who have already filed an application for cancellation of registration under section 29 of the Central Goods and Services TaxAct, 2017. However, the requirement of filing a final return, as under section 45 of the Central Goods and Services TaxAct, 2017 remains unchanged.

[Circular No. 69/43/2018-GST]

 

URL: http://www.cbic.gov.in/resources//htdocs-cbec/gst/Circular-No-69.pdf;jsessionid=A3267CA96858D42E92E36D3FDE3EBBF3


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