Violations that can cancel your GST registration

While the Centre has announced a number of relief measures for businesses in India during this lockdown, tax paying businesses will need to be prepared for a number of changes under the Goods and Services framework once normalcy resumes. Post lockdown, businesses are likely going to want to focus on manufacturing, marketing and sales in a bid to make up for lost profits during the lockdown. But these businesses need to remember that non compliance under the Goods and Services Tax can lead to cancellation of registration. While it is common knowledge that registrations can be cancelled if returns are not filed on time, businesses must also be aware of other violations that can lead to cancellation of registration. 

Provisions under section 29(2) of CGST Act 2017 and Rule 21 of the CGST Rules 2017 allow GST authorities to cancel the registration number of a taxpayer under several different circumstances. The same have been outlined below - 

Missed filing of GST returns
GST authorities have the right to cancel the GST registration of regular taxpayers as well as those taxpayers who have opted for the composition scheme under GST. This authority will be triggered if the returns are not filled for a consecutive period of six months for regular taxpayers and three consecutive tax periods for those under the composition scheme. 

No operations 
The registration of a taxpayer can be cancelled if they have voluntarily opted for registering under the Goods and Services Tax Framework but have not commenced any business operations for a period greater than six months since obtaining the registration number. 

Incorrect location 
While registering under the Goods and Services Tax, the taxpayer is required to specify the location of their operations. This location is verified by GST authorities before issuing a GSTIN. If the taxpayer is not operating from the location specified during registration, their registration can be cancelled. 

Issue of bogus invoice 
A business participating in the issue of a tax invoice or bill of supply without the supply of goods and/or services can face cancellation of registration when investigated.

Benefit denied to customer
Businesses who continue to charge customers with regular prices even after reduction of GST rates or exemptions under GST will be liable to inquiry followed by cancellation of registration. 

Delay in furnishing bank details 
Taxpayers are required to furnish their bank account details within 45 days of being issued the GSTIN or filing of first return after registering under GST, whichever is earlier. Failure to provide bank details can lead to cancellation of registration as per Section 49 of the CGST Act. 

Obviously, if there are violations happening on behalf of the taxpayer, there is an enquiry by GST authorities and the business facing violations is also given an opportunity to explain the violation. If the taxpayer is of the opinion that their registration is being threatened for unfair reasons, they can even challenge the notice in the court of law. 

Most registered taxpayers who commit violations under the GST framework are generally unaware of the rules or might not have access to the right technology solutions. Working alongside enterprise resource planning solutions providers like Avalara Technologies can help businesses automate their tax function, ensure that no deadlines are missed and maintain all compliance requirements.