Last updated: January 31st, 2024 2:14 PM

Suspension of GST Registration

The Government, with the intention to ease up the Goods and Service Tax for the taxpayer, is continuously amending/inserting various provisions of the Goods and Service Tax. Recently, vide the Central Goods and Service Tax (Amendment) Act, 2019 and the Central Goods and Service Tax (Amendment) Rules, 2019, the government has come up with the new concept of the suspension of GST registration. With the introduction of the suspension of GST registration, taxpayers who have applied for the cancellation of GST registration would be freed up from the requirement of complying with the GST return filing provision during the suspension period, thereby reducing the compliance cost of the taxpayer. The newly inserted provisions, with regard to the suspension of the registration, is made effective from 1^st February 2019. The concept of the suspension of the registration along with the effective new insertion in the Act and the Rules is being taken up in the current article.

Insertion of the New Provisions in the Act and the Rules

Section 29 of the Central Goods and Service Tax Act, 2017 contains provisions relating to the cancellation of registration. Vide the Central Goods and Service Tax (Amendment) Act, 2018 effective from 1^st February 2019, the following proviso has been inserted to section 29 (1) – ‘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.’ The above newly inserted proviso is self-explanatory which means that the registration of the taxpayer, who has applied for the cancellation of registration, can be suspended for such period and manner as prescribed. Giving effect to the above-inserted proviso, the Central Goods and Service Tax (Amendment) Rules, 2019 came up with entire new rule 21A dealing with the same. The main features of rule 21A are being summarized hereunder – Rule 21A is applicable to the registered person who has applied for the cancellation of its registration. In case the cancellation of registration proceedings is pending, the registration shall be deemed to have been suspended from later of the following dates –

• Date of submission of the application; or
• Date from which the cancellation is sought.

If the proper officer is of the view that the registration of the person is liable to be cancelled, in such case, he may suspend the registration of such person during the period when proceedings for the cancellation of registration are in process. It is important to note here that the proper officer can suspend the registration only after providing an opportunity of being heard to the registered person whose registration is being suspended. Following is the effect of suspension on the registered person whose registration has been suspended –

• Such registered person cannot make any taxable supply; and
• Such registered person is not required to furnish any returns.

On completion of proceedings by the officer, the suspension of the registration shall be deemed to have been revoked. Such revocation shall be effective from the date on which the suspension had come into effect. Illustration for better understanding – Suppose Mr. X has applied for cancellation of registration on 1st January 2018. Mr. X in the application has provided the effective date of cancellation of registration as 15^th December 2017.  The effective date of suspension would be later of the following –

• Date of submission of application i.e. 1st January 2018; or
• Date from which cancellation is sought i.e. 15th December 2017.

Thus the effective date of suspension would be 1^st January 2018. Suppose the registration cancellation proceeding has been completed on 31st March 2018, then, for the period from 1^st January 2018 till 31^st March 2018 would be suspension period and the registered person cannot issue tax invoice during the said period and further, the registered person is not required to file the returns during the said period.