New GST Registration after Cancellation

GST officers have been bestowed upon with the powers, vide section 29 (2) of the Central Goods and Service Tax Act, 2017, to cancel GST registration of a concerned person on account of non-compliance of the statutory provisions / non-filing of GST returns. If after cancellation a person wants to continue his/her business, he/she is required to apply for revocation of cancellation of the registration. In case of new GST registration after the cancellation of GST registration on account of non-compliance of the statutory provisions and applying for revocation thereon, the registered person applying for revocation would be required to pay all the pending tax liabilities. However, in order to avoid payment of pending tax liabilities, it has been noted by the Government that cases wherein the GST registration has been cancelled by the proper officer, on account of non-compliance of the statutory provisions - the concerned registered person, instead of applying for revocation of cancellation of registration is applying for fresh registration under GST. Vide circular no. 95/14/2019-GST dated 28^th March, 2019, the Central Board of Indirect Taxes and Customs has clarified the consequence the taxpayer has to face in case of non-revocation of cancelled registration and applying for new registration which is being summarized in the present article.

Section 29(2) of the CGST Act

Section 29(2) of the CGST Act declares the provisions and powers available to the concerned GST officer to cancel the registration under the following cases :

If the taxpayer has contravened provisions of the GST Act or rules made therein.
If the taxpayer under Section 10 has made taxable supplies and holds registration but has not filed a return for a consecutive period of three years.
If the taxpayer is a registered taxpayer, who has not furnished any tax return for the consecutive 6 six months.
If the taxpayer has opted for voluntary registration but has not commenced his business within 6 months from the date of registration.
If the taxpayer has obtained registration by means of fraud, wilful misstatement or through suppression of facts.

Note: The notification issued by the GST Council on 28th March 2019, allows all taxpayers whose registrations were cancelled can now apply for fresh registration in GST instead of applying for revocation. As per the new rules, the proper officer is responsible for granting new registrations to the taxpayers whose GST registrations were cancelled previously and has applied for revocation. The tax officers have been issued with guidelines to verify the reasons for previous cancellations and unauthorized holding of new GST registrations along with existing registration in the same state.

New Process

In order to protect revenue due to modus operandi adopted by errant taxpayers, as mentioned above, proper officer would exercise extra caution while processing of the application of a tax payer opting for another registration within the same State.

Vetting of New Registration Application

If a tax payer already having one registration, applies for another registration within the same state, the proper officer would undertake the following analysis –

Whether existing registration continues or is being cancelled;
If the existing registration is cancelled, then it would be analyzed whether the registration is cancelled on account of violation of provisions of section 29 (2) (b) [composition dealer has not furnished returns for 3 consecutive tax period] or section 29 (2) (c) [registered taxpayer has not furnished returns for a continuous period of 6 months];
If the registration is cancelled, whether the taxpayer has opted/filed application for revocation of cancellation of registration.

Consequences of Not Applying for Revocation

In case there is a cancellation of registration and the taxpayer has not applied for revocation of cancellation of registration and non-compliance still continues, then, it shall be deemed to be a ‘deficiency’ within the meaning of rule 9 (2) of the Central Goods and Service Tax Rules, 2017 and the officer may consider the same as a ground for rejection of application for fresh registration. Thus, in the coming days, taxpayers who have not complied with GST return filing regulations will find it extremely hard to obtain GST registration again.

Rejection of New Registration

Also, this notification empowers the officer to ensure that the revocation of GST registration cancellation applied by the taxpayer and the conditions specified in Section 29(2) have been duly followed. If the case of any default in respect of Section 29 or any provisions of the Act, the officer would consider cancelling the new registration.

GST Registration