Understanding Suspension of GST Registration
According to Rule 21A(1), Where a registered person applies for the cancellation of GST registration under Rule 20, the registration will be deemed to be suspended from the date of submission of application or the date from which cancellation is sought, whichever is later, pending the completion of proceedings for cancellation of registration.
Here, in this case, a registered person applies for the cancellation of GST Registration voluntarily. The status of the GST Registration gets suspended.
(2) Also, we have learned about Suo moto cancellation by the GST Officers. When GST Officers issue a show-cause notice for cancellation of GST Suo moto, then also the status of the GST Registration gets suspended.
CGST Rule 21A (2A)- Difference between returns leading to Suspension and then the cancellation
Under the Rule 21A(2A), where on comparison of the returns, furnished by the registered person the return filed under Section 39 (GST-3B in Normal cases) with details of outward supplies (GSTR-1) or details of inward supplies derived based on details of outward supplies (GSTR-1) or such other analysis.
It is shown that there are significant differences/ anomalies indicating contravention of the provisions of the Act and Rules.
It will lead to cancellation of registration, the registration shall be suspended and the said person shall be intimated in Form GST REG-31 electronically on the portal or by sending to his provided email address highlighting the differences/ anomalies and asking to explain why his registration shall not be canceled within 30 days.
During the suspension period, a registered person shall not make any taxable supply and is not required to file any return under Section 39. Here, a registered person shall not issue a tax invoice and not charge any tax in the suspension period.
CGST Rule 21A (3A)- Blocking Refund
Under Rule 21A(3A) a registered person whose registration has been suspended Rule 21A (2) /2A, no refund under Section 54 shall be granted during the suspension period.
Now, rule 21A (3A) states that refund under section 54 should be blocked when a cancellation proceeding has been initiated by the department under Rule 21A(2) or when cancellation proceedings are initiated under Rule 21A(2A).
Other provisions governing Suspension of Registration
Suspension of Registration under Rule 21A(1),(2),(2A) shall be deemed to be revoked by the proper officer upon the completion of proceeding (Rule 22) and such revocation shall be effective from the date on which suspension had come into effect.
Where any order having the effect of revocation of suspension has been passed, under Section 31(3)(a) and Section 40, in respect of supplies made during the suspension period and specified procedure therein shall apply.
How to activate suspended GST Registration?
We have read under Suo Moto cancellation or cancellation under Rule 21A (2A), GST officer issues a notice to the registered person and provides him the time limit to respond to why his registration shall not be canceled.
In case, a registered person is aware of GST provisions, he will make sure he submits a response and make the officer drop the proceedings. While the person who is unaware might not respond which will lead to an event warranting cancellation of GST Registration.
CGST Act gives the registered person power to apply for revocation of cancellation if the cancellation order is passed within 30 days.
So, at two stages when a Show cause notice is issued and when a cancellation order is issued. The suspended GST Registration can be activated.
Difference between Suspended and Cancelled GST Registration
From the plain reading of the CGST Rules and Provisions, it is clear that when GST Officer initiates proceeding under cancellation or when the registered person himself applies for cancellation. The registration will be deemed to be suspended.
When the cancellation order will be passed, the registration will be deemed to be canceled or inactive.
Akash Arora is a Chartered Accountant. His domain areas include Indirect Tax (GST), Direct tax, Internal Auditing as well as Statutory Auditing. He is a business advisor to FMCG, Construction, and Automobile Entities all over India. Feel Free To Contact Him. 🙂