The CGST Act provide that a taxpayer can apply for cancellation of registration in FORM GST REG-16 in certain circumstances.

Under the Act, the taxpayer seeking cancellation of registration shall have to pay, by way of debiting either the electronic credit or cash ledger,

– the input tax contained in the stock of inputs, semi-finished goods, finished goods and capital goods

 or

the output tax payable on such goods,

whichever is higher.

For the purpose of this calculation, the stock of inputs, semi-finished goods, finished goods and capital goods shall be taken as on the day immediately preceding the date with effect from which the cancellation has been ordered by the proper officer i.e. the date of cancellation of registration.

The circular, however, clarified that this requirement to debit the electronic credit and/or cash ledger by suitable amounts should not be a prerequisite for applying for cancellation of registration. This can also be done at the time of submission of final return in FORM GSTR-10. In any case, once the taxpayer submits the application for cancellation of his/her registration from a specified date, he/she will not be able to utilize any remaining balances in his/her electronic credit/cash ledgers from the said date except for discharging liabilities under GST Act upto the date of filing of final return in FORM GSTR-10.

It was further clarified that issuance of notice would not be required for registered persons who have not made any taxable supplies during the intervening period (i.e. from the date of registration to the date of application for cancellation of registration) and has furnished an undertaking to this effect.