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Published on:
February 23, 2023
By
Prerna

Understanding Section 29(2)(c) Cancellation of GST Registration

Registration under GST is mandatory for businesses whose annual turnover exceeds Rs. 40 lakhs (for goods) or Rs. 20 lakhs (for services). Once registered, businesses are required to comply with various provisions of the GST Act, including filing regular returns and maintaining proper records.

However, there may be situations where a business wants to cancel its GST registration. One of the provisions under which GST registration can be cancelled is Section 29(2)(c) of the GST Act. Let’s understand the provisions and procedures related to the cancellation of GST registration under Section 29(2)(c).

Section 29(2)(c) of the GST Act

Section 29(2)(c) of the GST Act provides for the cancellation of GST registration if a registered person has not furnished returns for a continuous period of six months or more. The provision applies to both regular taxpayers and composition scheme taxpayers.

The section reads as follows:

“Where a registered person has not furnished returns for a continuous period of six months or more, then he may be cancelled the registration, after giving a notice period of fifteen days in the manner as may be prescribed.”

Thus, if a registered person fails to file returns for six consecutive months, the GST authorities may cancel their registration after providing a notice period of fifteen days.

Procedure for Cancellation of GST Registration under Section 29(2)(c)

As per Rule 21 of the CGST Rules, the procedure for cancellation of GST registration under Section 29(2)(c) is as follows:

1. The GST authorities shall issue a notice in FORM GST REG-31 to the registered person, specifying the grounds for cancellation of registration and seeking their reply within a period of fifteen days.

2. If the registered person fails to furnish a reply within the stipulated time, the GST authorities shall pass an order in FORM GST REG-19 within thirty days from the expiry of the notice period, cancelling the registration.

3. If the registered person furnishes a reply, the GST authorities shall examine the same and pass an order in FORM GST REG-20 within thirty days, either accepting or rejecting the reply.

4. If the GST authorities accept the reply, they shall drop the proceedings for cancellation of registration. If they reject the reply, they shall pass an order in FORM GST REG-19 within thirty days, cancelling the registration.

Impact of Cancellation of GST Registration

Cancellation of GST registration can have various implications for a business, such as:

1. The business will no longer be liable to pay GST on its sales or claim input tax credit on its purchases.

2. The business will have to pay any outstanding tax liability, interest, or penalty before the cancellation of registration.

3. The business will have to comply with various provisions of the GST Act, such as return filing and record-keeping, even after the cancellation of registration, until all pending obligations are fulfilled.

Conclusion

Section 29(2)(c) of the GST Act provides for the cancellation of GST registration if a registered person has not furnished returns for a continuous period of six months or more. The procedure for cancellation of GST registration under Section 29(2)(c) involves providing a notice period of fifteen days to the registered person and passing an order within thirty days from the expiry of the notice period. Cancellation of GST registration can have various implications for a business, such as loss of input tax credit and compliance requirements. Hence, it is important for businesses to ensure timely compliance with GST provisions to avoid cancellation of registration.

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Updated on:
March 16, 2024