What is GST Registration Suspension?
GST registration suspension occurs when the GSTN detects inconsistencies in a taxpayer’s GST returns. The government introduced GST registration suspension under Rule 21A of the CGST Rules, 2019. This rule allows temporary suspension of GST compliance obligations for taxpayers whose registration is under cancellation process. During the suspension period, affected taxpayers are not required to file GST returns until final cancellation.
Why is GST Registration Suspended?
1. Discrepancies in Returns/Return not filed: Major differences in reported tax liabilities or ITC claims.
2. Unexplained Irregularities: If discrepancies remain unresolved, the GSTIN may be cancelled.
3. Pending Cancellation Requests: If a taxpayer applies for GST cancellation, the tax officer may suspend the registration until the cancellation process is completed.
GST Registration Suspension Due to Discrepancies in Returns
The Government of India introduced Rule 21A(2A) under Notification 94/2020 to address discrepancies in GST returns. This rule empowers GST officers to suspend a taxpayer’s GST registration if inconsistencies are found in the reported tax data.
A proper officer may suspend a taxpayer’s GST registration if any of the following discrepancies are detected:
1. Mismatch in Outward Supplies:
Differences between Form GSTR-1 (sales details) and Form GSTR-3B (summary return).
2. Mismatch in Input Tax Credit (ITC):
Differences between Form GSTR-2B (auto-populated ITC data) and Form GSTR-3B (ITC claimed).
Reasons for GST Registration Suspension
A taxpayer’s GST registration may be suspended for the following reasons:
1. Suspension Due to Cancellation Request
- When a taxpayer applies for GST cancellation, their registration is considered suspended from the date of application or cancellation request, whichever is earlier.
2. Suspension by GST Officer
A GST officer may suspend a registration if they suspect non-compliance or ineligibility, including:
1. Business Not Operating from Declared Location: The registered business address does not match the actual place of operations.
2. Violation of GST Laws: Non-compliance with the GST Act, 2017 provisions.
3. Failure to File Returns:
- Composition taxpayers: No return filed for three consecutive tax periods.
- Regular taxpayers: No return filed for six months.
4. Mismatched Sales Data: If the GSTR-1 sales details exceed the sales declared in GSTR-3B for the same tax period.
5. Non-Operational Business: A voluntarily registered taxpayer fails to commence business within six months of registration.
6. Fraudulent Registration: Registration obtained using false statements, incorrect documents, or misleading information.
Additional Grounds for GST Suspension or Cancellation
Effects of GST Registration Suspension
A taxpayer whose GST registration is suspended:
- Cannot make taxable supplies (i.e., cannot sell goods or services under GST).
- Is exempt from filing GST returns under Section 39 of the CGST Act, 2017.
- Enjoys reduced compliance burden until the final cancellation decision.
Businesses must ensure proper reconciliation of their GST returns to avoid suspension and possible cancellation of their GSTIN.
Period of GST Registration Suspension
Suspension of GST registration takes effect based on:
- The date of cancellation application submission OR
- The requested date for cancellation, whichever is later.
Cancellation of GST Registration: Meaning & Consequences
What is GST Registration Cancellation?
GST registration cancellation means that the taxpayer is no longer a registered GST entity. Once cancelled, they are not required to collect or pay GST, claim input tax credit (ITC), or file GST returns.
Impact of GST Registration Cancellation
- No GST Liability: The taxpayer is exempt from paying GST.
- Compliance Requirement: Certain businesses must be registered under GST. Continuing operations without valid GST registration is considered an offence, attracting heavy penalties.
Who can cancel the GST registration?
The below infographic guides you on who can call for the cancellation of GST registration-
Earlier, businesses that registered voluntarily under GST could apply for cancellation only after completing one year from the registration date. However, this restriction has now been removed.
Revocation of Cancellation of GST Registration
When is Revocation of Cancellation Applicable?
Revocation of cancellation of GST registration is applicable only when the tax officer has cancelled the registration on his own motion (Suo moto). In such cases, the affected taxpayer can apply for revocation within 30 days from the date of the cancellation order.
Procedure for Revocation of GST Cancellation
1. Application Submission:
- A registered taxpayer whose GST registration has been cancelled Suo moto by the tax officer can submit an application for revocation in Form GST REG-21.
- This application must be filed within 30 days from the date of service of the cancellation order.
- The application must be submitted through the GST Common Portal.
2. Approval Process:
- If the proper officer is satisfied with the application, they may revoke the cancellation by issuing an order in Form GST REG-22 within 30 days of receiving the application.
- The reasons for revocation must be recorded in writing.
3. Rejection of Revocation Application:
- If the officer is not satisfied, they may reject the application by issuing an order in Form GST REG-05 and inform the applicant accordingly.
- Before rejecting the application, the officer must issue a show-cause notice in Form GST REG-23, allowing the applicant to present their case.
- The applicant must respond to the notice using Form GST REG-24 within 7 working days from the date of the service of notice.
4. Final Decision by Tax Officer:
- The tax officer will review the response and make a decision within 30 days from the date of receiving clarification from the applicant.
Important Points to Note:
- No Revocation for Non-Filing of Returns: If the registration was cancelled due to failure to file returns, the taxpayer cannot apply for revocation until all pending returns are filed.
- Dues Must Be Cleared: Any outstanding tax, interest, and penalties must be paid before applying for revocation.
Final Thoughts
GST registration suspension can have significant implications for businesses, affecting their ability to conduct taxable transactions and comply with GST regulations. To avoid suspension or cancellation, businesses should ensure timely GST return filing, proper reconciliation of tax data, and compliance with GST laws. If your GST registration is suspended, it is crucial to identify the reason, address discrepancies, and take corrective actions promptly.
For expert assistance with GST compliance, return filing, and resolving GST suspension issues, contact ApkiReturn at +91 766 515 6000. Our team of professionals can help you navigate GST regulations and ensure seamless business operations.
Frequently Asked Questions (FAQs)
1. What is GST registration suspension?
GST registration suspension is a temporary halt on a taxpayer’s GST compliance obligations when their registration is under cancellation. During the suspension period, the taxpayer is not required to file GST returns or pay taxes. However, they cannot issue tax invoices or claim Input Tax Credit (ITC). The suspension remains in effect until the final cancellation decision is made or discrepancies are resolved.
2. Why is GST registration suspended?
GST registration may be suspended due to various reasons, such as discrepancies in GST returns, failure to file returns on time, or upon the taxpayer’s request for cancellation. The tax authorities may also suspend a GST registration if they suspect fraudulent activities or significant mismatches in tax filings. The suspension allows time for review before taking a final decision on cancellation.
3. Can I file GST returns during the suspension period?
No, during the suspension period, taxpayers are not required to file GST returns, pay taxes, or comply with GST-related obligations. This is because the registration is temporarily inactive, and any GST filings made during this period may not be considered valid. However, once the suspension is lifted, any pending returns must be filed promptly to avoid penalties.
4. How long does GST registration suspension last?
The duration of GST registration suspension depends on the reason for suspension and how quickly the discrepancies are resolved. If the taxpayer applies for cancellation, the suspension continues until the tax authorities approve or reject the request. If the suspension is due to discrepancies, it lasts until the taxpayer provides satisfactory responses or rectifies the issues.
5. What happens if my GST registration is cancelled?
Once your GST registration is cancelled, you can no longer collect GST from customers, file GST returns, or claim Input Tax Credit (ITC). You must clear any pending tax liabilities and submit a final GST return (GSTR-10) within three months of cancellation. Continuing business operations without a valid GST registration may lead to legal consequences and penalties.
6. Can I apply for revocation of GST cancellation?
Yes, you can apply for revocation of GST cancellation, but only if your registration was cancelled by the tax officer on their own (suo moto) and not on your request. The revocation request must be submitted within the specified time limit, and you need to provide reasons and supporting documents for the authorities to consider reinstating your registration.
7. How do I apply for revocation of GST cancellation?
To apply for revocation, you must file Form GST REG-21 online through the GST portal within 30 days from the date of the cancellation order. You should provide reasons for revocation and submit any required supporting documents. If your application is accepted, your GST registration will be reinstated, allowing you to continue business operations as usual.
8. What if my revocation application is rejected?
If your revocation application is rejected, the tax officer will issue a show-cause notice explaining the reasons for rejection. You must respond to this notice using Form GST REG-24 within 7 working days, providing clarifications or rectifications as needed. If the officer remains unsatisfied, the cancellation will be upheld, and you may need to reapply for fresh GST registration.
9. Can a voluntarily registered taxpayer apply for cancellation?
Yes, voluntarily registered taxpayers can apply for cancellation at any time if they no longer require GST registration. The cancellation request must be submitted through the GST portal, and the taxpayer must file a final return to settle any pending liabilities. Once cancelled, they cannot continue charging GST or availing ITC benefits.
10. What are the consequences of operating without valid GST registration?
Operating without valid GST registration is a legal offence and may lead to severe penalties, including fines and legal action. Businesses that continue to collect GST after cancellation may face additional liabilities, including tax recovery with interest. Repeated non-compliance may result in business restrictions or criminal proceedings under GST laws.
