QUESTION

ABC closed his business in the month of Dec-2021 but applied for cancellation of Registration on 04/05/2022 & the Date from which registration is to be cancelled was mentioned as 05/04/2022 but the Tax Officer was not satisfied with the cancellation Details & stated that `Date from which registration is to be cancelled is Incorrect. Enter correct date` and asked to file the clarification. So he filed the clarification on 30/05/2022 in which he wrote that `Please note that my Business was closed on 10/12/2021 but the property was handed over to the Builder on 05/04/2022 for the property Redevelopment. Kindly provide me with the Cancellation Order as early as possible` but his Application for cancellation of Registration was rejected so, kindly guide on what should be the next procedure.

ANSWER

FACT OF THE CASE:

After closure of business from the place of business, an application for cancellation of registration was submitted to the department but the same was rejected by the proper officer.

LAW APPLICABLE:

1. Clause (a) of rule 21 is laid as under;

" The registration granted to a person is liable to be cancelled, if the said person,-

(a) does not conduct any business from the declared place of business "

2. Sub rule (3) of rule 22 specifies that;

" Where a person who has submitted an application for cancellation of his registration is no longer liable to be registered or his registration is liable to be cancelled, the proper officer shall issue an order in FORM GST REG-19, within a period of thirty days from the date of application submitted under rule 20 or, as the case may be, the date of the reply to the show cause issued under sub-rule (1) or under sub-rule (2A) of rule 21A, cancel the registration, with effect from a date to be determined by him and notify the taxable person, directing him to pay arrears of any tax, interest or penalty including the amount liable to be paid under subsection (5) of section 29. "

3. Rule 21A(1) states that;

" Where a registered person has applied for cancellation of registration under rule 20, the registration shall be deemed to be suspended from the date of submission of the application or the date from which the cancellation is sought, whichever is later, pending the completion of proceedings for cancellation of registration under rule 22. "

INTERPRETATION:

Rule 21(a) dictates that when the business is no longer conducted from the declared place of business then the registration of the person is liable to be canceled. Further, as per rule 22(3) the proper officer shall issue the cancellation order in case the person is no longer liable to be registered under the act. Therefore in a case where a taxable person is no longer liable to be registered under the act, then it is not at the discretion of the proper officer to decide whether or not to issue the cancellation order. Rather it is mandated by the law to cancel the registration, after calling for additional information if required.

Therefore in not doing so, the proper officer is in violation of rule 22(3) read with rule 21(a).

CONCLUSION:

You may write a letter addressed to the proper officer mentioning the above law and to renounce your liability in case the said premises are used for any illegal activity or any tax evasion under GST laws or any other laws.
It may also be noted that as per rule 21A(1) your registration is deemed to be suspended from the date of submission of application pending proceedings. (Reply dt. 06/06/2022 )