Cancellation of GST Registration – Amendment

Posted onAuthorCA Kumar

  Cancellation of GST Registration – Amendment 

 According to Goods and Service Tax Act 2017 there has been many changes made through Notification no 94/2020

  1. CIC Notification No. 94/2020 – Central Tax has amended Rule 22 of cancellation of registration by issuing fourteen amendments of CGST Rules 2020.

1.1  In addition, the CBIC’s Twitter dated 23.12.2020 clarified the facts on recent rule changes against misinformation on social media which are confusing the real taxpayers.

1.2  In this article, an attempt has been made to explain the existing rule, in which the amendment and the facts clarified by CBIC are stated in a simple manner.

 

  1. Rules 21 of CGST Rule 2017 – Exiting Provisions

Rule 21 – If the registration given to a person is liable to be cancelled by the said person –

  1. Does not conduct any business from declared place of business.
  2. Issues invoices or bills without supplying goods or services or both.
  3. Violated provision relating to Anti Profiteering.
  4. Violates provisions of rule 10A in respect of furnishing details of bank account.

 

2.1 Amendment:- Clause E, F & G of Rule 21 has recently been inserted under Amendment Rule 2020.

  1. The actor gives input tax credit in violation of the provisions of section 16 of the rules.
  2. Form GSTR-1 presents details of external supply for one or more tax periods which is more than the external supply declared by him in his GSTR 3B (valid return under section 39 for the said tax period).
  3. Violates the provision of rule 86B.

 

Summary: It can be said in a nutshell that in addition to the existing provisions, now registration is also liable to be canceled for the following reason:-

  1. Compliance of sec 16 of Non-CGST Act – eligibility and conditions of taking.
  2. The tax paid in GSTR 3B is less than the output supply in GSTR 1.
  3. Use ITC in excess of 99% output tax liability.

 

  1. Rule 86B has been inserted vide Notification No. 94/2020 – Central Tax

Rule 86B

A registered person whose value of taxable supplies in addition to exempt supplies and exports in a month exceeds fifty lakh rupees. More than 99% of the output liability cannot use the input tax credit.

This rule is not applicable in the following cases: –

  1. Where the registered person deposited more than Rs 1 lakh as income tax under each Income Tax Act, 1961 in the last financial years.
  2. In which the registered person has received a refund of more than 1 lakh rupees in the preceding financial year due to export under LUT or inverted tax structure.
  3. The registered person discharged his production tax liability (up to the said month) in cash in the current financial year, which is more than 1% of the total production tax liability,
  4. This rule is not applicable to government department, public sector undertaking, local authority.

 

  1. Rule 22 A(2) of CGST Rule

Rule 22 A(2) 

Where the proper officer has reason to believe that the registration of a person is liable to be canceled, the registration is suspended (notification no. 94/2020 – Central tax removed) after giving that person a reasonable opportunity of being heard. will do it. Till the completion of the registration cancellation proceedings, the person with effect from the date to be determined.

 

New sub clause inserted vide rule 21A (2A):-

Where a comparisons of the GSTR 3B returns furnished by a registered person with

  1. The details of outward supplies furnished in Form GSTR – 1; or
  2. The details of (GSTR 2A and 2B) inward supplies derived based on the details of outward supplies furnished by his suppliers in their Form GSTR – 1, or such other analysis, as may be carried out on the recommendations of the council, show that there are significant differences or anomalies indicating contravention of the provision of the Act or the rules made thereunder, leading to the cancellation of registration of the said person shall be intimated in Form GST Reg – 31, electronically, on the common portal, or by sending a communication to his e – mail address provided at the time of registration or as amended from time, highlighting the said differences and anomalies and asking him to explain, within thirty days, as to why his registration shall not be cancelled.

 

  1. Rules 21A(3A) of CGST Rules

New Sub clause 3A to Rule 21A inserted

A registered person, whose registration has been suspended under sub – rule (2) or sub – rule (2A) or 21 (2A), shall not be granted any refund under section 54, during the period of suspension of his registration.

Conclusion

Now according to new provision any misutilization of GST provision lead to cancellation of GST registration.

CategoriesGST