There are two ways to cancel a GST registration one is on a voluntary basis via filling of application for cancellation and second by authorities in case of non-filing of returns and non- payment of taxes etc. There are lots of confusions that are we liable to file GST returns after applying for cancellation of GST registration on a voluntary basis or not.

Legal Provisions

Section 29(1) of CGST Act, 2017 (w.e.f. 01st February, 2019):

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:

1. the business has been discontinued, transferred fully for any reason including death of the proprietor, amalgamated with another legal entity, demerged or otherwise disposed of; or
2. there is any change in the constitution of the business; or
3. 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:

Provided that during the 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.

Rule 20 Application for cancellation of GST registration

A registered person, other than a person to whom a registration has been granted under rule 12 or a person to whom a Unique Identity Number has been granted under rule 17, seeking cancellation of his registration under sub-section (1) of section 29 shall electronically submit an application in FORM GST REG-16, including therein the details of inputs held in stock or inputs contained in semi-finished or finished goods held in stock and of capital goods held in stock on the date from which the cancellation of registration is sought, liability thereon, the details of the payment, if any, made against such liability and may furnish, along with the application, relevant documents in support thereof, at the common portal within a period of thirty days of the occurrence of the event warranting the cancellation, either directly or through a Facilitation Centre notified by the Commissioner.

Rule 21A Suspension of GST Registration

1. 3. Where a registered person has applied for cancellation of registration under rule 20, the registration shall be deemed to be suspended from the date of submission of the application or the date from which the cancellation is sought, whichever is later, pending the completion of proceedings for cancellation of registration under rule 22.
2. 4. Where the proper officer has reasons to believe that the registration of a person is liable to be cancelled under section 29 or under rule 21, he may, after affording the said person a reasonable opportunity of being heard, suspend the registration of such person with effect from a date to be determined by him, pending the completion of the proceedings for cancellation of registration under rule 22.
3. 5. A registered person, whose registration has been suspended under sub-rule (1) or sub-rule (2), shall not make any taxable supply during the period of suspension and shall not be required to furnish any return under section 39.

Explanation: For the purposes of this sub-rule, the expression “shall not make any taxable supply” shall mean that the registered person shall not issue a tax invoice and, accordingly, not charge tax on supplies made by him during the period of suspension.

Rule 22 Cancellation of GST Registration

Where a person who has submitted an application for cancellation of his registration is no longer liable to be registered or his registration is liable to be cancelled, the proper officer shall issue an order in FORM GST REG-19, within a period of thirty days from the date of application submitted under rule 20 or, as the case may be, the date of the reply to the show cause issued under sub-rule (1), cancel the registration, with effect from a date to be determined by him and notify the taxable person, directing him to pay arrears of any tax, interest or penalty including the amount liable to be paid under sub-section (5) of section 29.

Circulars, notifications, clarifications, flyers related to Cancellation of GST Registration Relevant circulars, notifications, clarifications, flyers issued by Government for the reference of readers:

1. GST Flyer titled ‘Cancellation of Registration in GST, as issued by the CBIC
2. Notification No. 3/2018-Central Tax, dated January 23, 2018, omitted proviso to rule 20 which provides that a person who has obtained voluntary registration cannot apply for cancellation before expiry of one year from the effective date of registration.
3. Notification No. 21/2018-Central Tax, dated April 18, 2018, inserted FORM GSTR-10 “Final return” to be filed by every person whose registration has been cancelled.
4. Notification No. 2 & 3/2019-Central Tax, dated January 29-Jan-, 2019, seeks to bring in force Central Goods and Services Tax (Amendment) Act, 2018, w.e.f. 1-Feb-2019.
5. Notification No. 3/2019-Central Tax, dated 29-Jan-2019, inserted rule inserting Rule 21A or prescribing the method of suspension of registration.
6. Circular No. 69/43/2018-GST, dated October 26, 2018, clarified issues related to the processing of an application for cancellation of registration.

Conclusion

It is clearly evident from the aforesaid provisions that when a person submits an application for voluntary cancellation of GST registration, his/her registration shall be suspended with immediate effect and they shall not be liable to make any taxable supply and therefore, will not have to file any return during the suspension period. However, the person requesting for voluntary cancellation is still required to file Annual Return i.e. GSTR 9/9A/9C and Final return i.e. GSTR-10. The final return GSTR-10 must be submitted within three months from the date of the cancellation order. Your log-in on the GST Portal will remain active until all the required activities are fulfilled.