Section 29 of the Central Goods and Services Tax (CGST) Act 2017 is a crucial provision that outlines the provisions for the cancellation of GST registration by the proper officer. Understanding this section is key to being informed and prepared, as it provides the circumstances under which a GST registration can be cancelled and the procedure for such cancellation.
Section 29: Cancellation or Suspension of Registration
(1) The ‘proper officer ‘, who is an authorized officer under the CGST Act, may, either on his motion or on an application filed by the registered person or by his legal heirs, in case of the 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 ‘, which refers to a person who is liable to pay tax under the CGST Act, can no longer be registered under section 22 or section 24.
(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 or
(c) any registered person, other than a person specified in clause (b), has not furnished returns for a continuous period of six months; or
(d) any person who has taken ‘voluntary registration ‘, which means they have chosen to register for GST even if their turnover is below the threshold, 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 using ‘fraud ‘, which means intentionally deceiving the authorities, ‘willful misstatement ‘, which means providing false information with the intent to mislead, or suppression of facts:
The proper officer shall not cancel the registration without allowing the person to be heard.
GST REG-27 is a notice issued by the GST authorities to taxpayers whose GST registration has been cancelled. This notice is not to be taken lightly, as it serves as a communication from the tax authorities requiring the taxpayer to submit their response and explain why their registration should not be cancelled, thereby highlighting the seriousness of the situation.
Suppose a business, XYZ Pvt Ltd, has not filed its GST returns for over six months. The GST officer, noticing this non-compliance, cancels XYZ Pvt Ltd’s GST registration and issues a REG-27 notice, asking the company to explain why their registration should not be cancelled due to this lapse.
When a taxpayer receives a REG-27 notice, they should:
If the taxpayer fails to respond ‘adequately ‘, which means not providing enough information or evidence, or if the response is not ‘satisfactory ‘, which means not addressing the issues raised in the notice, the GST authorities may proceed with the following:
Penalties for non-compliance with a REG-27 notice can include:
If a taxpayer believes that the notice is unjust or if the registration is cancelled despite providing the necessary information, the following remedies are available:
Section 29 of the CGST Act 2017 provides the framework for the proper officer to cancel GST registration. The GST REG-27 notice is integral to this process, allowing taxpayers to address any issues or discrepancies leading to the proposed cancellation. Understanding how to respond to this notice is crucial for ensuring timely resolution and compliance with GST laws. By following the dos and don’ts and knowing the legal remedies available, taxpayers can navigate the cancellation process smoothly and avoid potential legal issues.
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