Cancellation of registration under Rule 22 of the CGST Rules aligned with newly inserted sub-rule (2A) of Rule 21A

Bimal Jain , Last updated: 29 December 2020
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The CBIC vide Notification No. 94/2020-Central Tax, dated December 22, 2020, has issued Central Goods and Services Tax Rules (Fourteenth Amendment), 2020, inter alia, amending Rule 22 of the Central Goods and Services Tax Rules, 2017 ("CGST Rules"), dealing with "Cancellation of registration" in the following manner:

• Rule 22(3) - Inserted the words "or under sub-rule (2A) of rule 21A" after the words, brackets, and figure "the show cause issued under sub-rule (1)".

Thus, now the proper officer shall cancel the registration and issue an order, within a period of 30 days from the date of reply to show cause notice issued under newly inserted sub-rule (2A) of Rule 21A, i.e. in cases where comparison of the returns (GSTR-3B and GSTR-1) furnished by a registered person shows the significant differences or anomalies indicating contravention of the provisions of the CGST Act, 2017 or the Rules made thereunder.

• Rule 22(4) - Inserted the words "or in response to the notice issued under sub-rule (2A) of rule 21A" after the words, brackets, and figure "reply furnished under sub-rule (2)".

Now the proper officer shall drop the proceedings of cancellation of registration and pass an order in Form GST REG-20 on being satisfied with the reply to the show-cause notice issued under newly inserted sub-rule (2A) of Rule 21A of the CGST Rules.

Note: The above changes are done to only align Rule 22 of the CGST Rules (cancellation of registration) with newly inserted Rule 21A(2A) ibid.

Cancellation of registration under Rule 22 of the CGST Rules aligned with newly inserted sub-rule (2A) of Rule 21A

Amended Rule 22 of the CGST Rules, now reads as under w.e.f. December 22, 2020:

"22. Cancellation of registration.-

(1) Where the proper officer has reasons to believe that the registration of a person is liable to be canceled under section 29, he shall issue a notice to such person in FORM GST REG-17, requiring him to show cause, within a period of seven working days from the date of the service of such notice, as to why his registration shall not be canceled.

(2) The reply to the show cause notice issued under sub-rule (1) shall be furnished in FORM REG–18 within the period specified in the said sub-rule.

(3) 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 canceled, 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 sub-rule (1) of 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 sub-section (5) of section 29.

(4) 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.

(5) The provisions of sub-rule (3) shall, mutatis mutandis, apply to the legal heirs of a deceased proprietor, as if the application had been submitted by the proprietor himself."

The Notification can be accessed from here