A show cause notice from the GST department, or an order cancelling a registration, is serious but it is not the end of the matter. The Act and the Rules set out a procedure with specific time limits, and most of the difficulty comes from missing them.
Key facts
- Show cause notice
- Form GST REG-17 (Section 29, CGST Act)
- Reply
- Form GST REG-18, within 7 working days of service (Rule 22)
- Revocation
- Form GST REG-21 within 90 days of the cancellation order (Rule 23(1), from 1 October 2023; earlier 30 days)
- Extension
- Up to 180 days more, for sufficient cause, by the Commissioner or an authorised officer
- If rejected
- Appeal under Section 107 to the Appellate Authority
The show cause notice
Section 29 of the CGST Act allows the proper officer to cancel a registration on grounds such as non-filing of returns for the period the Act specifies, contravention of the Act, or a registration obtained by fraud or suppression. Before cancelling, the officer ordinarily issues a notice in Form GST REG-17 stating the grounds and calling for a reply. Under Rule 22 the reply, in Form GST REG-18, is to be filed within seven working days of service of the notice.
What the reply should do
The reply should meet each ground stated in the notice, and be accompanied by proof: filed returns, payment challans, or documents showing that the business continues at the declared address. If the officer is satisfied, the proceedings are dropped by an order in Form GST REG-20. If not, the registration is cancelled by an order in Form GST REG-19.
Revocation after cancellation
Section 30 allows a registered person whose registration was cancelled by the officer on his own motion to apply for revocation. The application is made in Form GST REG-21 within 90 days from the date of service of the cancellation order (Rule 23(1) of the CGST Rules, as amended with effect from 1 October 2023; the earlier limit was 30 days), and the officer is to decide within the time the Rules provide. On sufficient cause being shown, and for reasons recorded in writing, the Commissioner (or an officer authorised by him, not below the rank of Additional or Joint Commissioner) can extend the 90 days by a further period of up to 180 days. Pending returns and dues are usually required to be cleared as part of the application.
If revocation is refused
An order rejecting revocation, like the cancellation order itself, can be challenged by an appeal under Section 107 before the Appellate Authority within the period the Act prescribes. Dates in this area have been extended by notifications at times, so the current position should be confirmed from the portal and the notifications.
Why prompt action matters
While a registration is cancelled the business cannot lawfully collect tax or issue tax invoices, and input tax credit may be affected. The notice should therefore be read carefully the day it is received and the dates on it noted.
This article is general legal information and is not advice on any particular matter. Facts differ, and the law and prescribed forms are amended from time to time, so documents and dates should be checked against the current provisions before any step is taken.
Related service: GST Registration Cancellation in Mumbai