Circular No. 69/43/2018-GST
F. No. CBEC/20/16/04/2018-GST
Government of India
Ministry of Finance
Department of Revenue
Central Board of Indirect Taxes and Customs
GST Policy Wing
New Delhi, Dated the 26th October, 2018
To,
The Principal Chief Commissioners/Chief Commissioners/Principal Commissioners/
Commissioners of Central Tax (All)
The Principal Directors General/Directors General (All)
Madam/Sir,
Subject: Processing of Applications for Cancellation of Registration submitted in
FORM GST REG-16 - Reg.
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The Board is in receipt of representations seeking clarifications on various issues in
relation to processing of the applications for cancellation of registration filed by taxpayers in
FORM GST REG-16. In order to clarify these issues and to ensure uniformity in the
implementation of the provisions of law across the field formations, the Board, in exercise of
its powers conferred by section 168 (1) of the Central Goods and Services Tax Act, 2017
(hereinafter referred to as the “CGST Act”), hereby clarifies the issues as detailed hereunder:
2.
Section 29 of the CGST Act, read with rule 20 of the Central Goods and Services Tax
Act, 2017 (hereinafter referred to as the “CGST Rules”) provides that a taxpayer can apply
for cancellation of registration in FORM GST REG-16 in the following circumstances:
a.
Discontinuance of business or closure of business;
b.
Transfer of business on account of amalgamation, merger, de-merger, sale, lease or
otherwise;
c.
Change in constitution of business leading to change in PAN;
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d.
Taxable person (including those who have taken voluntary registration) is no longer
liable to be registered under GST;
e.
Death of sole proprietor;
f.
Any other reason (to be specified in the application).
3.
Rule 20 of the CGST Rules provides that the taxpayer applying for cancellation of
registration shall submit the application in FORM GST REG-16 on the common portal
within a period of 30 days of the „occurrence of the event warranting the cancellation‟. It
might be difficult in some cases to exactly identify or pinpoint the day on which such an
event occurs. For instance, a business may be transferred/disposed over a period of time in a
piece meal fashion. In such cases, the 30-day deadline may be liberally interpreted and the
taxpayers‟ application for cancellation of registration may not be rejected because of the
possible violation of the deadline.
4.
While initiating the application for cancellation of registration in FORM GST REG-
16, the Common portal captures the following information which has to be mandatorily filled
in by the applicant:
a)
Address for future correspondence with mobile number and email address;
b)
Reason for cancellation;
c)
Date from which cancellation is sought;
d)
Details of the value and the input tax/tax payable on the stock of inputs, inputs
contained in semi-finished goods, inputs contained in finished goods, stock of capital
goods/plant and machinery;
e)
In case of transfer, merger of business, etc., particulars of registration of the entity in
which the existing unit has been merged, amalgamated, or transferred (including the copy of
the order of the High Court / transfer deed);
f)
Details of the last return filed by the taxpayer along with the ARN of such return
filed.
On successful submission of the cancellation application, the same appears on the dashboard
of the jurisdictional officer.
5.
Since the cancellation of registration has no effect on the liability of the taxpayer for
any acts of commission/omission committed before or after the date of cancellation, the
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proper officer should accept all such applications within a period of 30 days from the date of
filing the application, except in the following circumstances:
a)
The application in FORM GST REG-16 is incomplete, i.e. where all the relevant
particulars, as detailed in para 4 above, have not been entered;
b)
In case of transfer, merger or amalgamation of business, the new entity in which the
applicant proposes to amalgamate or merge has not got registered with the tax authority
before submission of the application for cancellation.
In all cases other than those listed at (a) and (b) above, the application for cancellation of
registration should be immediately accepted by the proper officer and the order for
cancellation should be issued in FORM GST REG-19 with the effective date of cancellation
being the same as the date from which the applicant has sought cancellation in FORM GST
REG-16. In any case the effective date cannot be a date earlier to the date of application for
the same.
6.
In situations referred to in (a) or (b) in para 5 above, the proper officer shall inform
the applicant in writing about the nature of the discrepancy and give a time period of seven
working days to the taxpayer, from the date of receipt of the said letter, to reply. If no reply is
received within the specified period of seven working days, the proper officer may reject the
application on the system, after giving the applicant an opportunity to be heard, recording
reasons for rejection in the dialog box that opens once the „Reject‟ button is chosen. If reply
to the query is received and the same on examination is found satisfactory, the Proper Officer
may approve the application for cancellation and proceed to cancel the registration by issuing
an order in FORM GST REG-19. If reply to the query is found to be not satisfactory, the
Proper Officer may reject the application for cancellation on the system, after giving the
applicant an opportunity to be heard. The Proper Officer must also record his reasons for
rejection of the application in the dialog box that opens when the „Reject‟ button is chosen.
7.
Section 45 of the CGST Act requires every registered person (other than an Input
Service Distributor or a non-resident taxable person or a person paying tax under the
provisions of section 10 or section 51 or section 52) whose registration has been cancelled, to
file a final return in FORM GSTR-10, within three months of the effective date of
cancellation or the date of order of cancellation, whichever is later. The purpose of the final
return is to ensure that the taxpayer discharges any liability that he/she may have incurred
under sub-section (5) of the section 29 of the CGST Act. It may be noted that the last date for
furnishing of FORM GSTR-10 by those taxpayers whose registration has been cancelled on
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or before 30.09.2018 has been extended till 31.12.2018 vide notification No. 58/2018 –
Central Tax dated the 26th October, 2018.
8.
Further, sub-section (5) of section 29 of the CGST Act, read with rule 20 of the
CGST Rules states that the taxpayer seeking cancellation of registration shall have to pay, by
way of debiting either the electronic credit or cash ledger, the input tax contained in the stock
of inputs, semi-finished goods, finished goods and capital goods or the output tax payable on
such goods, whichever is higher. For the purpose of this calculation, the stock of inputs,
semi-finished goods, finished goods and capital goods shall be taken as on the day
immediately preceding the date with effect from which the cancellation has been ordered by
the proper officer i.e. the date of cancellation of registration. However, it is clarified that this
requirement to debit the electronic credit and/or cash ledger by suitable amounts should not
be a prerequisite for applying for cancellation of registration. This can also be done at the
time of submission of final return in FORM GSTR-10. In any case, once the taxpayer
submits the application for cancellation of his/her registration from a specified date, he/she
will not be able to utilize any remaining balances in his/her electronic credit/cash ledgers
from the said date except for discharging liabilities under GST Act upto the date of filing of
final return in FORM GSTR-10. Therefore, the requirement to reverse the balance in the
electronic credit ledger is automatically met. In case it is later determined that the output tax
liability of the taxpayer, as determined under sub-section (5) of section 29 of the CGST Act,
was greater than the amount of input tax credit available, then the difference shall be paid by
him/her in cash. It is reiterated that, as stated in sub-section (3) of section 29 of the CGST
Act, the cancellation of registration does not, in any way, affect the liability of the taxpayer
to pay any dues under the GST law, irrespective of whether such dues have been determined
before or after the date of cancellation.
9.
In case the final return in FORM GSTR-10 is not filed within the stipulated date,
then notice in FORM GSTR-3A has to be issued to the taxpayer. If the taxpayer still fails to
file the final return within 15 days of the receipt of notice in FORM GSTR-3A, then an
assessment order in FORM GST ASMT-13 under section 62 of the CGST Act read with
rule 100 of the CGST Rules shall have to be issued to determine the liability of the taxpayer
under sub-section (5) of section 29 on the basis of information available with the proper
officer. If the taxpayer files the final return within 30 days of the date of service of the order
in FORM GST ASMT-13, then the said order shall be deemed to have been withdrawn.
However, the liability for payment of interest and late fee shall continue.
