What is Suo Moto Cancellation in GST? How to Handle Cancellation?

Have you ever logged into the GST portal before, and out of nowhere, without prior notice, your GST registration displays the term “Cancelled Suo-Moto”? No matter how balanced you are, panicking is normal. Since your business is your lifeline. 

Our goal is that not a single business owner/accountant/chartered accountant should panic, and that is the reason we are publishing this guide on suo moto GST cancellation in GST. 

In this blog, we will break down the meaning of suo moto GST cancellation, the reasons, and how to revoke GST registration after cancellation. 

What is Suo Moto Cancellation under GST?

Suo moto cancellation in GST is the cancellation of your GST registration initiated by the department’s end without your request. It happens when the department has reasons to believe that you are not following the GST rules. 

You may get a notification for the cancellation via SMS, Email or directly when logging in on the GST portal. Once the cancellation kicks in, your GSTIN (GST Identification Number) is inactive.

Reasons Behind Suo Moto Cancellation in GST

The following are the reasons that trigger Suo Moto Cancellation in GST.

Regular Non-filing of Returns: When you fail to file GSTR-3B or GSTR-1 returns for several months, you will get a notice.

Discontinued or Non-existent Business: In case you never actually began the business since the time of registering, or you have ceased operations without notifying the department.

Suspicion of Fraud: In case the department considers that there is evasion of tax or that fake invoices are issued. 

Mismatch of Tax Records: Your sales/purchase records (think GSTR-2A or GSTR-3B ) are not matching, and it is raising red flags. 

Wrong Registration: Sometimes, the department discovers that the initial GST registration was done by misstatement or fraudulent information.

Notice to Cancellation: The Suo Moto Process, Step by Step

Show Cause Notice: It always begins with a show cause notice. In other words, the department is asking you to “tell why your registration shouldn’t be cancelled”. This can be sent to your registered email or through SMS. 

Seven Days to Respond: The GST law provides only seven working days to respond. Precisely, only a week to justify yourself or submit your records.

Review by the Departments: In case your reply is strong enough to consider, the GST officer may terminate further proceedings, and your business registration can get a new life. If your reply is not convincing or you do not reply, the registration stands cancelled, with a note of suo moto. 

Order Passed: The cancellation order is uploaded, and the business owner receives a copy via email and SMS. 

Revocation of Suo Moto Cancellation.

If your GST registration is suo motu cancelled, then you need not panic; you may request revocation by following the process explained below: 

Here’s how to do it step-by-step:

Step 1: Log in to the GST Portal

Go to Services → Registration → Application for Revocation of Cancelled Registration.

Step 2: Application File Revocation (Form REG-21)

Provide justification as to why the cancellation needs to be reinstated- e.g. you have submitted all pending returns or corrected the problems discussed.

• Attach Documents

• Filed returns

• Proof of payment of dues

• Reply to the show-cause notice.

• Any other supporting files

Step 3: Officer’s Review (Form REG-22)

If satisfied, then the officer passes an order to restore your GSTIN within 30 days of the application.

Step 4: If Rejected (Form REG-23)

The time period to file an appeal under Section 107 of the CGST Act is 3 months.

Precautions to Prevent Suo Moto Cancellation.

1. File Returns Regularly

Nil returns are made even without a sale.

2. Keep Address Updated

Any change of business address or ownership should be updated as soon as possible.

3. Monitor GST Notices

Check the GST portal frequently and go to Notices and Orders.

4. Avoid Wrong ITC Claims

Reconcile your 2B prior to filing.

5. Maintain Proper Records

Store invoices, purchase records and payment receipts in order to have them available to auditors.

6. Use Reliable GST Software

These hassles are avoided by using such tools as Munim GST Return Filing Software, which simplifies the process of keeping up with compliance, monitoring notices, and filing out returns in time.

Real-Life Case: When Suo Moto Cancellation Shocked a Small Trader.

Imagine Priya, who operates a shop dealing with home decoration in Pune. She was occupied with a family emergency for two months, missed her GSTR-3B, and she put GST issues behind her. Her accountant came on, out of the blue, and her GSTIN was cancelled suo-moto. Priya started panicking and thought that her business was over.

But following the recommendation of her chartered accountant, she promptly submitted the outstanding returns, accompanied by a letter giving the reasons for her circumstances, and replied to the department within a few days. Her GSTIN was reinstated, and the cancellation was revoked after the officer noticed that she had taken immediate action. 

Frequently Asked Questions

1. How to check the suo moto cancellation in GST?​

Details of the status of your GST registration can easily be checked on the official GST Portal. 

Go to Search Taxpayer → Search by GSTIN/UIN, enter your GST number and captcha, and click search. 

If the status shows “Cancelled Suo Moto,” then it implies that the department cancelled your GST registration on its own.

2. How to reply to a suo moto cancellation in GST?

After getting a Show Cause Notice (Form REG-17) of a proposed cancellation, you must respond through Form REG-18 within 7 working days of the date of the notice. 

In your response, state your side of the case and provide supporting evidence, like filed returns or payment receipts and discuss each query mentioned in the notice. An appropriate and smooth response will help you escape cancellation.

3. How to reinstate GST registration after suo moto cancellation​?

When your registration has been cancelled suo moto, then you could apply to revoke your registration by filling in form REG-21 in the GST portal. Before applying, make sure to submit all the outstanding GST returns and or any outstanding tax, interest or penalties. 

The officer will check your application, and in case it is satisfactory, the GSTIN will be reinstated through Form REG-22. On rejection, you have a period of 3 months to appeal under Section 107 of the CGST Act.

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