GST REG-17 Form – GST Registration Cancellation Notice

The Goods and Services Tax (GST) provisions expressly say that the proper officer, as well as the taxpayer himself, can cancel a GST registration. If the proper officer has reasonable grounds to suspect that the taxpayer’s GST registration should be canceled. The competent officer will issue a show-cause notice in form GST REG-17, to proceed cancellation process.

Starting with the circumstances under which notice can be issued by the proper authority, this article will cover everything concerning the issuance of notice in form GST REG-17.

When Can GST Officer Issue Notice In Form GST REG-17?

Scenarios under which the competent officer can cancel the GST registration have been listed in section 29(1) and 29(2) of the Central Goods and Services Tax Act, 2017. And we have listed all such scenarios underneath:

Section 29(1)

In the event of the death of a registered person or his legal heirs, the proper officer may, either on his own motion or on an application filed by the registered person or his legal heirs, cancel the registration in the manner and within the period prescribed, having regard to the circumstances where –

(a) the business has been discontinued, entirely transferred for whatever cause, including the proprietor’s death, amalgamated with another legal entity, demerged, or otherwise disposed of; or
(b) there is a change in the business’s constitution; or
(c) the taxable person is no longer required to register under sections 22 or 24, or plans to opt-out of the voluntary registration made under sub-section (3) of section 25.

The registration may be suspended for such duration and in such way as may be prescribed during the pendency of the proceedings pertaining to cancellation of registration filed by the registered person.

Section 29(2)

1. Non-filing of a GST Return in the following circumstances:
   • The taxpayer has not filed three consecutive GST returns in the case of the composition scheme dealer.
   • In any other scenario, where the taxpayer has not filed six GST returns in a row.
2. If the GST registration was obtained by deliberate misrepresentation, fraud, or concealment of facts.
3. The taxpayer has voluntarily registered for GST but has not started doing business within six months of registering.
4. The GST Act or the GST Rules have been violated by the registered taxable person such as registration has been obtained by means of fraud, willful misstatement or suppression of facts.
5. The proper officer has the authority to begin cancellation procedures by issuing a notification in form GST REG-17 in any of the aforementioned circumstances.

Provisions Related To Notice in Form GST REG-17

Section 29(2) of the CGST Act makes it essential for the proper officer to provide the taxpayer with a reasonable opportunity to be heard. In addition, rule 22(1) of the Central Goods and Services Tax Rules, 2017 stipulates that before a GST registration is canceled, the preceding officer must issue a notice in form GST REG-17, which must include the following information:

1. The reasons why the proper officer thinks the GST registration should be revoked.
2. Instructions for the registered taxable person to make an appropriate response in form GST REG-17 within 7 working days after receiving the notice.
3. Date and time of the case’s hearing, if one is scheduled.

Actions After Receiving The Notice In Form GST REG-17

GST registered taxpayers who get a notice in form GST REG-17 can take one of the following steps:

1. You can accept the cancellation and settle any outstanding debts if you are convinced.

Every registered person whose registration is cancelled shall pay an amount, by way of debit in the electronic credit ledger or electronic cash ledger, equivalent to the credit of input tax in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock or capital goods or plant and machinery on the day immediately preceding the date of such cancellation or the output tax payable on such goods, whichever is higher, calculated in such manner as may be prescribed: Provided that in case of capital goods or plant and machinery, the taxable person shall pay an amount equal to the input tax credit taken on the said capital goods or plant and machinery, reduced by such percentage points as may be prescribed or the tax on the transaction value of such capital goods or plant and machinery under section 15, whichever is higher.

2. Within the time limit, the registered person can submit an appropriate response in form GST REG-18.

Note: Where the reply furnished under sub-rule (2) [or in response to the notice issued under sub-rule (2A) of rule 21A] is found to be satisfactory, the proper officer shall drop the proceedings and pass an order in FORM GST REG –20: [Provided that where the person instead of replying to the notice served under sub-rule (1) for contravention of the provisions contained in clause (b) or clause (c) of sub-section (2) of section 29, furnishes all the pending returns and makes full payment of the tax dues along with applicable interest and late fee, the proper officer shall drop the proceedings and pass an order in FORM GST-REG 20].