The Latin term “Suo moto” signifies “on its own accord” or “by its own will. Its legal meaning is an exercise of power by a body on its initiative and not under any outside pressure. This way of Suo moto registration in the Goods and Services Taxation (GST) Act allows tax authorities to introduce GST registration. There is the provision of Sou moto revocation or cancellation of GST registration where tax officials cancel your GST registration on the grounds of non-observance, inactivity, or fraudulent practices.
This blog covers the process initiated for Suo Moto Cancellation of GST Registration, conditions for triggering the nullification of GST Registration, the ways to avoid the Suo Moto GST cancellation, activating and reversing the cancellation, and the effect of such revocation.
However, the GST Registration cannot be cancelled without serving a Show Cause Notice to the taxpayer and being provided a fair hearing by the tax authorities. In fact, the taxpayers can file their clarification within the period stipulated. As per Section 29(2) of the Central Goods and Services Tax Act, the GST Authority shall have to state valid and sufficient reasons for the Suo Moto cancellation in a legally justified manner.
Conditions for Initiation of the GST Registration Cancellation
A tax officer can issue a Suo Moto cancellation of registration under various conditions as enumerated under the GST legislation, which are as follows:
- A taxpayer excludes composition taxpayers who did not file returns for six months.
- Delivery of goods and services without issuing any invoice, and contravention of the stipulations laid down by the Act or the rules prescribed thereunder for the purpose of tax avoidance.
- Issuance of a bill or invoice without any delivery of goods or services in breach of the regulations set forth by the Act or its rules framed, which results in illegal benefit or use of input tax credit or tax refund/compensation.
- Raising any sum as consideration for tax but does not remit the same to the Central or State Government’s account for more than three months from the due date of such payment.
- Omits to pay any amount of interest, tax or penalty to the account of the Central/State Government above a period of three months from the date on which such payment becomes outstanding
- The individual is no longer eligible to deduct tax at source according to the provisions of the GST Law
- The individual no longer qualifies to collect tax at source according to the provisions of the GST Law
- The individual no longer needs to be registered according to the provisions of the GST Law
- GST Practitioner is indicted of misconduct in association with any proceeding under the GST Law.
- Closure/Discontinuation of Business
- Alteration in the Constitution causing a change in PAN
- Is no longer eligible to pay tax
- Transfer of business due to amalgamation, lease, sale, merger/demerger, or otherwise disposed of, etc.
- Demise of Sole Proprietor
- The composition individual has not filed returns for three successive tax periods
- Registration has been acquired by means of fraud, suppression of facts, willful misstatement, etc.
Process for Suo Moto Cancellation of GST Registration
According to the GST law, the tax authority has to furnish a show-cause notice to the tax assessee and offer him/her the opportunity to be heard. In response to the show-cause notice, the taxpayer needs to explain why the GST registration was not revoked within 7 days of receiving the notice. If the tax official is content with the taxpayer’s response, they can abandon the cancellation proceedings and inform the taxpayer via SMS or e-mail.
If the taxpayer fails to reply to the notice within 7 days or the GST officer remains dissatisfied with the explanation, they can go ahead with the Suo moto cancellation of GST registration.
How to Activate and Reverse Cancellation of Suo Moto GST Registration?
The procedure required to initiate cancellation of Suo Moto GST registration is as follows:
- Access the GST portal
- Key in the login credentials in the GST portal.
- Select ‘services’ on the dashboard. Then choose registration > application for revocation of cancelled registration option.
- Fill in the reasons for revocation and attach the required documents.
- Choose the authorised signatory and select ‘submit’ to apply.
- If the GST official is satisfied with the justification submitted, they can revoke the cancellation order.
- The GST officer shall accomplish this within thirty days of receiving the application for revocation.
- Upon the signing of an order in Form GST REG-22 by the GST officer, the assessee will be regarded as an active assessee, and the entire access offered to the assessee will be enabled.
- Your registration certificate and taxpayer profile will be updated too.
How to Avoid Suo Moto Cancellation of GST?
Suo Moto cancellation of GST registration is when the tax authority cancels your registration on its own grounds. You can prevent it in the following manner:
1. File Your GST Returns Regularly
Non-filing of return is a major cause for Suo Moto cancellation. If you are a regular taxpayer, make sure that you file GSTR-1 and GSTR-3B every month. Composition taxpayers must file GSTR-4 annually.
Keep accurate records of your purchases and sales so that you don’t make mistakes in your returns.
2. Follow GST Laws and Regulations
Don’t commit acts that violate GST laws like tax evasion, issuing false invoices, or engaging in bogus activities.
Make sure you fill in the correct details in the registration form. The account will be cancelled if the details are wrong.
3. Respond to Communications and Notices
Therefore, you should respond promptly to a show-cause notice and provide all the necessary documents and explanations within the stipulated time. Your course registration will be cancelled if you ignore the warnings.
4. Maintain Accurate Records
Make sure to keep all the necessary business records, such as bills and invoices.
Impact of Suo Moto GST Registration/Revocation
Once the registration is revoked by the Tax Authority, the taxpayer will be notified through Email and SMS. An order for Cancellation of Registration will be published and intimated to the Main authorised signatory by SMS and Email. The order will be published on the taxpayer’s dashboard to print, view and download.
The status of GSTIN/UIN/GSTP ID from ‘Proceeding for Cancellation initiated’ to ‘Inactive’ and will be intimated to the other relevant Tax Authority.
Taxpayers would not be permitted to file a return or upload invoices for the duration after the date of cancellation stated in the cancellation order. Moreover, GSTP will be unable to perform GSTP functions for any Taxpayer for the duration after the date of cancellation cited in the cancellation order.
Taxpayers will be unable to alter registration details following the issuance of a cancellation order. However, mobile number and email address can be updated till debts/refunds are cleared. The facility to file an application for cancellation (if relevant) will be available for the Cancelled Registration.
