Provisions under Section 29 of the Central Goods and Services Tax (CGST) Act, 2017 relating to “Cancellation or Suspension of Registration”:
Section 29 of CGST Act 2017: Cancellation or Suspension of Registration (CHAPTER VI REGISTRATION) [Refer Note 1(a)]
(1) The proper officer may, either on his own motion or on an application filed by the registered person or by his legal heirs, in case of death of such person, cancel the registration, in such manner and within such period as may be prescribed, having regard to the circumstances where,–
(a) the business has been discontinued, transferred fully for any reason including death of the proprietor, amalgamated with other legal entity, demerged or otherwise disposed of; or
(b) there is any change in the constitution of the business; or
(c) the taxable person, other than the person registered under sub-section (3) of section 25, is no longer liable to be registered under section 22 or section 24 [Refer Note 2]
(c) the taxable person is no longer liable to be registered under section 22 or section 24 or intends to opt out of the registration voluntarily made under sub-section (3) of section 25:
Provided that during pendency of the proceedings relating to cancellation of registration filed by the registered person, the registration may be suspended for such period and in such manner as may be prescribed. [Refer Note 1(b)]
(2) The proper officer may cancel the registration of a person from such date, including any retrospective date, as he may deem fit, where,–
(a) a registered person has contravened such provisions of the Act or the rules made thereunder as may be prescribed; or
(b) a person paying tax under section 10 has not furnished returns for three consecutive tax periods the return for a financial year beyond three months from the due date of furnishing the said return; or [Refer Note 3(a)]
(c) any registered person, other than a person specified in clause (b), has not furnished returns for a continuous period of six months such continuous tax period as may be prescribed; or [Refer Note 3(b)]
(d) any person who has taken voluntary registration under sub-section (3) of section 25 has not commenced business within six months from the date of registration; or
(e) registration has been obtained by means of fraud, willful misstatement or suppression of facts:
Provided that the proper officer shall not cancel the registration without giving the person an opportunity of being heard.
Provided further that during pendency of the proceedings relating to cancellation of registration, the proper officer may suspend the registration for such period and in such manner as may be prescribed. [Refer Note 1(c)]
(3) The cancellation of registration under this section shall not affect the liability of the person to pay tax and other dues under this Act or to discharge any obligation under this Act or the rules made thereunder for any period prior to the date of cancellation whether or not such tax and other dues are determined before or after the date of cancellation.
(4) The cancellation of registration under the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act, as the case may be, shall be deemed to be a cancellation of registration under this Act.
(5) Every registered person whose registration is cancelled shall pay an amount, by way of debit in the electronic credit ledger or electronic cash ledger, equivalent to the credit of input tax in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock or capital goods or plant and machinery on the day immediately preceding the date of such cancellation or the output tax payable on such goods, whichever is higher, calculated in such manner as may be prescribed:
Provided that in case of capital goods or plant and machinery, the taxable person shall pay an amount equal to the input tax credit taken on the said capital goods or plant and machinery, reduced by such percentage points as may be prescribed or the tax on the transaction value of such capital goods or plant and machinery under section 15, whichever is higher.
(6) The amount payable under sub-section (5) shall be calculated in such manner as may be prescribed.
| Note: CBEC notifies 22/06/2017 as the Commencement date for Sections 1, 2, 3, 4, 5, 10, 22, 23, 24, 25, 26, 27, 28, 29, 30, 139, 146 and 164 of the CGST Act 2017, vide Notification 1/2017. |
Related Posts:
CBIC Clarifications on GST Registration Cancellation Procedure
Rule 20 of CGST Rules 2017: Application for Cancellation of Registration
Amendments History:
1. Amendments made vide Section 14 of the CGST (Amendment) Act, 2018 (GOI Notification dated 29/08/2018), followed with Notification 2/2019 on commencement date of 01/02/2019:
a) The words ‘or Suspension’ inserted after the word “Cancellation” in marginal heading;
b) Proviso to clause (c) of sub-section (1) inserted; and
c) Second Proviso to sub-section (2) inserted.
2. In sub-section (1), clause (c) substituted vide Section 121 of the Finance Act 2020 (GOI Notification dated 27/03/2020, followed with Central Tax Notification 92/2020 dated 22/12/2020 on commencement date of 01/01/2021.
3. Amendments in sub-section (2), vide Section 101 of the Finance Act 2022 (GOI Notification dt. 30/03/2022) followed with Central Tax Notification 18/2022 on commencement of 01/10/2022:
(a) In clause (b), the text “returns for three consecutive tax periods” substituted with the text “the return for a financial year beyond three months from the due date of furnishing the said return”; and
(b) In clause (c), the text “a continuous period of six months” substituted with the text “such continuous tax period as may be prescribed”.
Commentary on Section 29 of CGST Act, 2017
The section 29 of the CGST Act, 2017 outlines the scenarios for cancellation or suspension of GST registration under five subsections.
Section 29(1) of CGST Act
Subsection (1) provides that the proper officer may cancel a GST registration either proactively or based on an application from the registered taxpayer or their legal heirs when certain situations occur. The conditions can include the discontinuation or full transfer of the business, changes in business constitution, or when the taxpayer is no longer liable or wishes to voluntarily opt out of registration.
Section 29(2) of CGST Act
Subsection (2) discusses the officer’s power to cancel a registration from any given date if the registered person has contravened provisions of the Act or regulations, hasn’t furnished returns for a certain time, hasn’t started business within six months of voluntary registration, or obtained registration fraudulently. However, this cancellation won’t be applied without providing the person a fair chance to be heard.
Section 29(3) of CGST Act
Subsection (3) clarifies that cancellation of registration won’t absolve a person from paying tax and other dues or completing any obligations under the Act for any period before the cancellation.
Section 29(4) of CGST Act
Subsection (4) states that cancellation under the State or Union Territory GST Acts will be treated as a cancellation under the CGST Act.
Section 29(5) of CGST Act
Subsection (5) provides for a debit in the electronic ledger equivalent to the credit of input tax on inputs, semi-finished, or finished goods, or capital goods/plant machinery held in stock on the preceding day of cancellation. If tax rates on these goods vary, the higher value will be used. For capital goods, an amount equal to the input tax credit taken on these goods, reduced by certain prescribed points, or the tax on the transaction value of the merchandise, whichever is higher, is payable.
Section 29(6) of CGST Act
Subsection (6) states that the amount payable under subsection 5 will be calculated as prescribed.
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Note: The CGST Act 2017 has been notified vide GOI Notification dt. 12/04/2017, which has subsequently been amended through CGST (Extension to J&K) Act 2017, Finance Act 2018, CGST Amendment Act 2018, Finance Act 2019, Finance Act 2020, Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance 2020, Finance Act 2021, Finance Act 2022, Finance Act 2023, CGST Amendment Act 2023, including various Notifications issued by the Govt./ CBIC from time to time, relating to the commencement dates of various Sections/ Provisions in the respective CGST/ Amendment Acts, wherever required. Information on this page is a Section-wise compilation of the Amendments made by various Notifications issued by CBIC from time to time, with best possible efforts for accuracy. In any case, E&OE. For official/ updated information, please visit CBIC website.
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