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 1st 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 15th 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 1st January 2018 till 31st 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.

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Frequently Asked Questions

Common questions about GST Registration Suspension Rules and Procedures.

The suspension of GST registration is introduced to ease the compliance burden on taxpayers who have applied for cancellation of their GST registration. During the suspension period, they are freed from the requirement of filing GST returns, thereby reducing their compliance costs.

The provisions related to the suspension of GST registration, introduced through the Central Goods and Service Tax (Amendment) Act, 2019 and the Central Goods and Service Tax (Amendment) Rules, 2019, became effective from 1st February 2019.

A taxpayer's GST registration can be suspended during the pendency of the proceedings related to the cancellation of registration filed by the registered person themselves.

The effective date of suspension is the later of the following dates: the date of submission of the application for cancellation of registration, or the date from which the cancellation is sought by the registered person.

No, the proper officer cannot suspend a taxpayer's registration without providing an opportunity of being heard to the registered person whose registration is being suspended.

During the suspension period, the registered person cannot make any taxable supply, and they are not required to furnish any GST returns.

The suspension of registration is deemed to be revoked on the completion of proceedings by the proper officer. The revocation is effective from the date on which the suspension had come into effect.

No, a registered person whose registration has been suspended cannot issue tax invoices during the suspension period.

No, suspended registered persons are not required to furnish any GST returns during the suspension period.

The suspension of GST registration benefits taxpayers who have applied for cancellation of their registration by reducing their compliance costs during the suspension period, as they do not have to file GST returns or maintain records for the suspended period.