Suspension, Cancellation, Revocation of GSTIN's

Last Updated On: Sept. 1, 2021, 11:32 p.m.


The GSTN has recently started sending out SMS to taxpayers informing them about discrepancies between the GST returns filed by them. According to the recent Notification 94/2020 dated 22nd December 2020, a new sub-rule 2A has been inserted in Rule 21A of the Central Goods and Services Tax (CGST) Rules. Any significant differences or anomalies observed between the GSTR-3B and the GSTR-1/2B could lead to suspension of GST registration. Further, if these differences remain unexplained, the GSTIN could get cancelled.


Whose GST registration or GSTIN can get suspended?

The GSTIN of a registered person can be cancelled only by a proper officer if he has a reason to believe that the registration needs to be cancelled. The proper officer must give the registered person a reasonable opportunity of being heard and then follow the appropriate procedure for cancellation as mentioned under Rule 22 of the CGST Rules 2017.

During the period in which such cancellation proceedings are being carried out, the proper officer can suspend the registration.

Suspension of registration due to differences between GST returns:

  • Rule 21A(2A): A new sub-rule 2A has been inserted via notification 94/2020 which states that if a proper officer finds any discrepancies:
  • On comparing details of outward supplies furnished under Form GSTR-1 and Form GSTR 3B
  • On comparing details of inward supplies reflecting in the Form .GSTR-2B with the Form GSTR-3B
  • Any other analysis
  • He can issue form GST REG-31 for intimating such discrepancies to the taxpayer. He will also mention that if a proper explanation is not provided on these discrepancies, the registration may get cancelled.
  • He can also suspend the registration as per Rule 21A(2A) with effect from the date of this communication to the taxpayer. Further, the proper officer can lift the suspension on receiving a satisfactory reply from the taxpayer.
  • This provision related to the suspension of GST registration till cancellation was welcomed by the taxpayers as it reduced the compliance burden of the taxpayers till the completion of cancellation proceedings.


Suspension of GSTIN:

Suspension is nothing but a temporary disablement of the taxpayer. This would mean that for the tine being a GSTIN is suspended, the taxable person shall be treated like an unregistered person. He shall neither be permitted to make any supplies, nor he can collect any tax or issue tax invoice or claim any refund during the period of suspension. The suspension of number takes place under two circumstances:

Application for Cancellation of Registration by taxpayer,

Suo-motto suspension of GSTIN by the department as per circumstances prescribed under Section 29 of CGST Act 2017.

The suspension of GSTIN does not mean that it cannot be retrieved, it simply means that till the time cancellation proceedings are not completed, the activities of persons are temporarily stopped. It is merely a pro-active action by the department to prevent bigger fraud/default by the person. During the period of suspension, taxpayer shall not be required to do any compliances i.e. he will not be required to file any returns.


How to revoke the suspension of GST registration?

The suspension of GST registration can be revoked after the completion of GST registration cancellation proceedings. The revocation of suspension of GST registration will be effective from the date the suspension has come into effect.


Cancellation of GSTIN:

Suspension of GSTIN is a temporary arrangement while cancellation proceedings are pending, on the other hand cancellation of GSTIN is when the number is cancelled permanently, and the person is treated as unregistered. It is not a temporary disablement. Once the number is cancelled for reasons prescribed under section 29 of CGST Act 2017, the taxable person cannot do any activity. The only option he is left with is to apply for revocation of cancellation of number with the proper officer.

Once the GSTIN is cancelled, department may initiate the demand and recovery proceedings and may ask the taxpayer to set-off the ITC in the ledger against the liability pertaining to stock/ capital goods and fixed assets in the possession of the taxpayer on the date of cancellation of GSTIN.


What can be done after the cancellation of GSTIN?

In most of the cases it is seen that the application of revocation is rejected without any sufficient reasons. Under these circumstances, consultants usually advise their clients to apply for new GSTIN which is also not issued as upon new application, department could retrieve that GSTIN was cancelled on the said PAN number. In such a case, where the GSTIN has been cancelled without proper reasons, the consultants can choose to file an appeal against the order of cancellation within 3 months of communication of cancellation order. Such an appeal must be drafted with utmost caution, and it is advised that the help of an experts like Unitax can save lot of time and efforts for the consultants.

Though there is an option to file an appeal, it is matter of concern that till the time appeal is heard and finally decided, the taxpayer’s business comes to total halt as he is not permitted to operate with the cancelled GSTIN. Unfortunately, GST law does not provide for any alternative remedy for carrying out the operations till the time appeal is finally decided. During this while, the taxpayer may move an application for early hearing and may request the appellate authority to issue order for revocation or stay on cancellation till the disposal of appeal. In cases where even that is not possible and process is impairing the operations of business, the taxpayer may opt for alternative remedies of creating new firm or operate under any other PAN on temporary basis.


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