- Introduction
As per Section 29(2) of CGST Act,2017, a proper officer may suo-motu cancel the registration of a person from such date, including any retrospective date, as he may deem fit, after giving an opportunity to be heard in the following cases:
(a) registered taxable person has contravened the provisions of Act or Rules; or
(b) a person paying tax under Section 10 (composition scheme) has not furnished returns for three consecutive periods; or
(c) any registered person other than composition supplier has not furnished the returns for a consecutive period of six months; or
(d) a person who has taken voluntary registration has not commenced the business within six months from date of registration; or
(e) registration taken by means of fraud, willful misstatement or suppression of facts.
Cancellation of registration has grave repercussions for tax payers as on one hand from date of cancellation of registration they shall be ineligible to avail any input tax credit as the same can be availed only by a registered person as per Section 16(1) of the CGST Act,2017 and on the other hand the liability to pay tax shall remain intact on supplies made before and after cancellation.
The small tax payers are more prone to cancellation of GST registration as due to GST being a relatively new law and due to lack of knowledge they may commit unintentional contravention or non filing of returns for which they may have to pay heavy cost in form of being deprived of their GST registration.
In order to provide relief to the tax payers in cases where their GST registration has been cancelled by the proper officer, provisions of revocation of cancellation have been incorporated in Section 30 of the CGST Act,2017 which we shall be discussing in the succeeding paras.
2. Statutory provisions regarding revocation of cancellation of registration
As per Section 30(1) of the CGST Act,2017 read with Rule 23 of the CGST Rules, 2017 , any registered person, whose registration is cancelled by the proper officer on his own motion, may apply to such officer for revocation of cancellation of the registration in the FORM GST REG-21 within thirty days from the date of service of the cancellation order.
As per proviso(s) to Rule 23(1) of the CGST Rules, 2017, in case the registration has been cancelled due to non filing of returns the application of registration can be filed only after furnishing of returns and payment of tax, interest, penalty and late fee. Further the returns for the period from date of order of cancellation of registration till the date of order of revocation of cancellation of registration shall be furnished within 30 days from date of such order.
Further as per Section 30(2) of the CGST Act, 2017 read with Rule 23(2), (3) and (4) of the CGST Rules, 2017, the proper officer if satisfied,can revoke the cancellation of registration by an order in FORM GST REG-22 within a period of 30 days from date of receipt of application. Else it may reject the application in FORM GST REG-05 before providing an opportunity to the applicant.
3. Process of revocation of cancellation at a glance
As stated above the process of revocation of registration is possible only after filing the pending returns and amount due as tax, interest and late fee has been paid. The process of revocation is given below for ready reference of our readers:
a) file the pending returns after payment of liability, if cancellation is made due to non filing of returns.
b) application for revocation of cancellation of registration in FORM GST REG-21 is to be filed within 30 days from the date of service of order of cancellation of registration.
c) Proper officer can revoke cancellation of registration if he is satisfied by an order in FORM GST REG-22 within 30 days from date of receipt of application.
d) Proper officer may issue show cause notice in FORM GST REG-23 requiring applicant to show cause as to why the apllication for revocation should not be rejected, if he is not satisfied with the application for revocation.
e) The applicant shall furnish reply in FORM GST REG-24 within 7 days from receipt of show cause notice.
f) Proper officer may grant the revocation of cancellation of registration in FORM GST REG-22 if satisfied or reject by an order in FORM GST REG-05, within 30 days from date of receipt of reply.
4. Grant of COVID-19 relief in regard to revocation of cancellation of registration
In order to provide the relief in complinaces due to COVID-19 pandemic Notification No. 35/2020-CT dated 03-04-2020 was issued under Section 168A of the CGST Act,2017 for extending due date of compliance which falls during the period from 20-03-2020 to 29-06-2020 to 30-06-2020.
As discussed supra in case the registration has been cancelled, the application for revocation of cancellation of registration is to be filed within 30 days from the date of service of order of cancellation of registration. Now if such period of 30 days is expring between 20.03.2020 to 29.06.2020, the application can be filed till 30.06.2020 in light of Notification No. 35/2020-CT dated 03-04-2020.
5. Amendment of Section 30 – Time limit for revocation of cancellation can be enhanced
As per Clause 122 of the Finance Act, 2020 an amendment was made in Section 30 of the the CGST Act, 2017 whereby proviso has been added to Section 30, mandating that additional time period for filing of application for revocation of cancellation of registration can be given by higher GST authorities, if sufficient cause is shown.
The proviso is reproduced below for ready reference:
“Provided that such period may, on sufficient cause being shown, and for reasons to be recorded in writing, be extended,—
(a) by the Additional Commissioner or the Joint Commissioner, as the case may be, for a period not exceeding thirty days;
(b) by the Commissioner, for a further period not exceeding thirty days, beyond the period specified in clause (a).”.
Thus as per the above proviso a maximum period of upto 90 days ( 30 days + 60 days additional time) can be available for an applicant to file application for revocation of cancellation of registration. However such additional time shall be granted only if reasonable cuase for not filing application for revocation is proven.
It is pertinent to mention here that though Finance Act, 2020 has been promulgated on 27.03.2020, but the above amendment has not been enforced till now, as notification on this regard has not yet been issued.
In this regard in the press release issued after the 40th GST Council Meeting held on 12.06.2020 , it has been stated that certain clauses of the Finance Act, 2020 amending CGST ACt, 2017 and IGST Act, 2017 shall be brought into force from 30.06.2020. Thus it is expected that Notification regarding enforceability of the amendement in Section 30 as discussed above, would be issued by 30.06.2020.
6. One time extension in period for seeking revocation of cancellation of registration
Amongst the measures for trade facilitation , one of the decision made by GST Council in its 40th Meeting held on 12.06.2020 is providing a one time extension in period for seeking revocation of cancellation of registration. The press release to the meeting stated that to facilitate tax payers who could not get their cancelled GST registrations restrored in time , an opportunity is being provided for filing of application for revocation of registration upto 30.09.2020, in all cases where registrations have been cancelled till 12.06.2020. Relevant Notification for enforcing above decision of GST Council is awaited.
The one time extension in period for seeking revocation is a golden opportunity for all persons whose registration has been cancelled since introduction of GST regime viz 01.07.2020 to 12.06.2020. They can now file application for revocation of registration upto 30.09.2020. Needless to mention that in case registration has been cancelled due to non filing of returns the revocation of registration is possible only after filing the pending returns and amount due as tax, interest and reduced late fee (as per decision in 40th GST Council Meeting) has been paid.
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Frah Saeed is a law graduate specializing in the core field of indirect taxes and is the Co-founder of taxwallah.com. She has authored many publications on GST and is into full-time consultancy on GST to big corporates. She as a part of taxwallah.com heads a team comprising of Chartered Accountants and Advocates and plays a key role in our mission to disseminate GST knowledge to all.
