Cancellation of GST registration by Legal Heir

Filing for Cancellation of GST Registration by Legal Heir in case of Death of Sole Proprietor

1. Can a legal heir transfer the ITC to a new entity in case of the death of the sole proprietor?

Yes, a legal heir can transfer the ITC to a new entity in case of the death of the sole proprietor. In such a case, the legal heir needs to get a new registration under GST and transfer the ITC through FORM GST ITC-02 to this new entity.

2. What is the process to cancel the GST registration in case of the death of the sole proprietor? How can a legal heir transfer the ITC to a new entity in case of the death of the sole proprietor?

(i) In case of death of the sole proprietor, the Legal heir has to visit the office of the Proper Officer (Jurisdiction Officer) and submit the Death Certificate of the sole proprietor along with the Succession Certificate before the Proper Officer as documentary evidence.

(ii) Proper Officer will add legal heir as the authorized signatory on the GST Portal.

In case the successor is minor, he cannot be added as an authorized signatory. In such cases, the minor successor needs to be represented by his legal/natural/testamentary (appointed by will) guardian. The legal guardian needs to be appointed or nominated by the competent authority (Normally District Judge). A legal guardian can take decisions on behalf of a minor legal heir/ successor and he can also appoint an authorized signatory for this purpose.

(iii) Legal heir has to apply for new registration.

Queries :

1. Whether a succession certificate is mandatory?

2. Whether NOC from other legal heirs is not sufficient.

3. Whether legal heirs can continue business post-death of proprietor till he obtains another registration.

4. What is the process of getting a succession certificate.

Tax officer

The registration under GST can be cancelled by the tax officer, in the following cases- 

1. Where the taxpayer is conducting business from any place other than the registered principal place of business.
2. Issues an invoice or a bill of supply without making any Supply of goods or services or both (i.e., in violation of the provisions) OR 
3. Violates the anti-profiteering provisions (for example, not passing on the benefit of ITC to customers) OR

With effect from 1st January 2021-

1. Violating Rule 86B i.e. Utilising the ITC from electronic credit ledger to discharge more than 99% of the tax liability for specified taxpayers with the total taxable value of supplies exceeding Rs.50 lakh in the month, with some exceptions. OR
2. A taxpayer who cannot file GSTR-1 due to non-filing of GSTR-3B for more than two consecutive months or one quarter for those who opted for the QRMP scheme. OR 
3. The taxpayer has availed the input tax credit in violation of the provisions of section 16 of the Act or the rules.

Revocation of cancellation of GST registration

It means that when the Tax officer cancels the GST registration of a taxpayer on his own motion then the taxpayer can file an application to reverse the decision of the tax officer.

• Within 30 days from the date of order of cancellation. A registered person can submit the application for revocation of cancellation of his GST registration, in form GST REG – 21, if his registration has been cancelled suo-moto by the tax officer.
• If the proper officer is satisfied with the application filed by a registered person then he can revoke the cancellation of registration within 30 days from the receipt of such application.
• Also, PO can reject the application by order in FORM GST REG – 05 & communicate the same to the taxpayer
• Before rejecting the application, PO will have to issue a show-cause notice to the applicant in FORM GST REG -23. The applicant will have to submit a reply in  FORM GST REG-24 within 7 working days.
• PO will make a final decision within 30 days from the date of receipt of clarification submitted by the applicant in FORM GST REG-24.

As per Notification No. 34/2021 – Central Tax dated 29th August 2021, where a registration has been cancelled under clause (b) or (c) of sub-section (2) of section 29 of the said Act and the time limit for making an application of revocation of cancellation of registration under sub-section (1) of section 30 of the said Act falls during the period from the 1st day of March 2020 to 31st day of August 2021, the time limit for making such application shall be extended up to the 30th day of September 2021.