ANNEXURE P/12

CIRCULAR NO.69/43/2018-GST [F.NO.CBEC/20/16/04/2017-GST]

SECTION 29 OF THE CENTRAL GOODS AND SERVICES TAX ACT, 2017, READ WITH
RULE 20 OF THE CENTRAL GOODS AND SERVICES TAX RULES, 2017 -
REGISTRATION - CANCELLATION OR SUSPENSION OF - PROCESSING OF
APPLICATIONS FOR CANCELLATION OF REGISTRATION SUBMITTED IN FORM GST
REG-16

CIRCULAR NO.69/43/2018-GST [F.NO.CBEC/20/16/04/2017-GST], DATED 26-10-2018

AS AMENDED BY CIRCULAR NO. 88/07/2019-GST [F. NO. CBEC-20/16/04/2018 - GST], DATED
1-2-2019

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, demerger, sale, lease or
otherwise;
c. Change in constitution of business leading to change in PAN;
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 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 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.
10. Rule 68 of the CGST Rules requires issuance of notices to registered persons who fail to furnish
returns under section 39 (FORM GSTR-1, FORM GSTR-3B and FORM GSTR-4), section 44
(Annual Return – FORM GSTR-9/FORM GSTR-9A/FORM GSTR-9C), section 45 (Final Return
– FORM GSTR-10) or section 52 (TCS Return – FORM GSTR-6). It is clarified that issuance of
notice would not be required for registered persons who have not made any taxable supplies during
the intervening period (i.e. from the date of registration to the date of application for cancellation of
registration) and has furnished an undertaking to this effect.
11. 1 [It is pertinent to mention here that section 29 of the CGST Act has been amended by the CGST
(Amendment) Act, 2018 to provide for "Suspension" of registration. The intent of the said
amendment is to ensure that a taxpayer is freed from the routine compliances, including filing
returns, under GST Act during the pendency of the proceedings related to cancellation. Accordingly,
the field formations not to issue notices for non-filing of return for taxpayers who have already filed
an application for cancellation of registration under section 29 of the CGST Act. Further, the
requirement of filing a final return, as under section 45 of the CGST Act, remains unchanged].
12. It may be noted that the information in table in FORM GST REG-19 shall be taken from the
liability ledger and the difference between the amounts in Table 10 and Table 11 of FORM GST
REG-16.
13. It is requested that suitable trade notices may be issued to publicize the contents of this circular.
14. Difficulty, if any, in implementation of the above instructions may please be brought to the notice
of the Board.
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1. Substituted by Circular No. 88/07/2019-GST [F. No. CBEC-20/16/04/2018 - GST], Dated 1-2-
2019.