Section 29 governs cancellation of registration — at the taxpayer's request, or by the officer for default or fraud. Cancellation has serious consequences, especially when made retrospective: customers lose credit on supplies made during the back-dated period. The courts have insisted that the power be exercised with reasons.
Key points
- Under section 29(1) of the CGST Act, 2017 registration may be cancelled on discontinuance or transfer of business, change in constitution, or when the person is no longer liable (or opts out of voluntary registration).
- Under section 29(2) the proper officer may cancel — from any date, including retrospectively — for prescribed contraventions, non-filing of returns, failure to start business after voluntary registration, or registration obtained by fraud; but only after a hearing.
- Retrospective cancellation must rest on objective criteria and be proposed in the show cause notice; the Delhi High Court in Pratima Tyagi v Commissioner of GST (2023) moved a cancellation back-dated to 2017 forward to the date of the taxpayer's application.
- On cancellation, credit on inputs in stock and capital goods must be paid back (section 29(5)); liabilities for past periods continue (section 29(3)).
The provisions
29(1)Cancellation on application; suspension
Statutory text
(1) The proper officer may, either on his own motion or on an application filed by the registered person or by his legal heirs, in case of death of such person, cancel the registration, in such manner and within such period as may be prescribed, having regard to the circumstances where,-
(a) the business has been discontinued, transferred fully for any reason including death of the proprietor, amalgamated with other legal entity, demerged or otherwise disposed of; or
(b) there is any change in the constitution of the business; or
2[(c) the taxable person is no longer liable to be registered under section 22 or section 24 or intends to optout of the registration voluntarily made under sub-section (3) of section 25:]
1[Provided that during pendency of the proceedings relating to cancellation of registration filed by the registered person, the registration may be suspended for such period and in such manner as may be prescribed.]
* Enforced w.e.f. 22nd June, 2017.
1. Inserted by s. 14 of The Central Goods and Services Tax (Amendment) Act, 2018 (No. 31 of 2018) - Brought into force w.e.f. 01st February, 2019.
2. Substituted for "(c) the taxable person, other than the person registered under sub-section (3) of section 25, is no longer liable to be registered under section 22 or section 24." by s. 121 of the Finance Act, 2020 (No. 12 of 2020) - Brought into force w.e.f. 01st January, 2021 vide Notification No. 92/2020 - C.T., dated 22nd December, 2020.
29(2)Cancellation by the officer
Statutory text
(2) The proper officer may cancel the registration of a person from such date, including any retrospective date, as he may deem fit, where,-
(a) a registered person has contravened such provisions of the Act or the rules made thereunder as may be prescribed; or
(b) a person paying tax under section 10 has not furnished 3[the return for a financial year beyond three months from the due date of furnishing the said return]; or
(c) any registered person, other than a person specified in clause (b), has not furnished returns for a 4[such continuous tax period as may be prescribed]; or
(d) any person who has taken voluntary registration under sub-section (3) of section 25 has not commenced business within six months from the date of registration; or
(e) registration has been obtained by means of fraud, wilful misstatement or suppression of facts:
Provided that the proper officer shall not cancel the registration without giving the person an opportunity of being heard:
1[Provided further that during pendency of the proceedings relating to cancellation of registration, the proper officer may suspend the registration for such period and in such manner as may be prescribed.]
3. Subtituted (w.e.f. 1st October, 2022 vide Notification No. 18/2022 - CT dated 28.09.2022.) by s. 101 by The Finance Act 2022 (No. 6 of 2022). for "returns for three consecutive tax periods".
4. Subtituted (w.e.f. 1st October, 2022 vide Notification No. 18/2022 - CT dated 28.09.2022.) by s. 101 by The Finance Act 2022 (No. 6 of 2022). for "a continuous period of six months".
What it means
The officer may cancel "from such date, including any retrospective date, as he may deem fit" — but only after a hearing, and the registration may be suspended meanwhile.
- (a) contravention of prescribed provisions (Rule 21 — for instance, not conducting business from the declared place, issuing invoices without supply);
- (b) a composition taxpayer not filing the annual return within three months of the due date (from 01.10.2022);
- (c) other persons not filing returns for the prescribed continuous period (from 01.10.2022; earlier six months);
- (d) a voluntary registrant not starting business within six months;
- (e) registration obtained by fraud, wilful misstatement or suppression.
Case on this provision
Pratima Tyagi v Commissioner of GST
2023:DHC:9025-DB · 19.12.2023 · Delhi High Court, Division Bench (Vibhu Bakhru, Amit Mahajan JJ.)
- Facts
- A sole proprietor closed her business on 11.11.2019 and applied for cancellation. The department instead issued a notice for non-filing of returns for six months, without a date of hearing, and cancelled the registration with effect from 01.07.2017, giving no reasons.
- Held
- Section 29(2) permits retrospective cancellation, but the discretion cannot be exercised arbitrarily; the decision to cancel retrospectively must rest on objective criteria. There was no justification for cancellation from 01.07.2017 — covering periods when returns had been filed. The order was modified to take effect from 11.11.2019.
- Here
- A retrospective date must be proposed in the notice, justified by reasons and tied to the default found; otherwise the cancellation operates prospectively or from the taxpayer's own application.
29(3)–(6)Continuing liability; reversal of credit
Statutory text
(3) the cancellation of registration under this section shall not affect the liability of the person to pay tax and other dues under this Act or to discharge any obligation under this Act or the rules made thereunder for any period prior to the date of cancellation whether or not such tax and other dues are determined before or after the date of cancellation.
(4) The cancellation of registration under the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act, as the case may be, shall be deemed to be a cancellation of registration under this Act.
(5) Every registered person whose registration is cancelled shall pay an amount, by way of debit in the electronic credit ledger or electronic cash ledger, equivalent to the credit of input tax in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock or capital goods or plant and machinery on the day immediately preceding the date of such cancellation or the output tax payable on such goods, whichever is higher, calculated in such manner as may be prescribed:
Provided that in case of capital goods or plant and machinery, the taxable person shall pay an amount equal to the input tax credit taken on the said capital goods or plant and machinery, reduced by such percentage points as may be prescribed or the tax on the transaction value of such capital goods or plant and machinery under section 15, whichever is higher.
(6) The amount payable under sub-section (5) shall be calculated in such manner as may be prescribed.
What it means
Cancellation does not wipe out past liability. Cancellation under a State or UT Act is cancellation under the CGST Act. On cancellation the person pays an amount equal to the credit on inputs in stock (including in semi-finished and finished goods) and on capital goods (reduced by prescribed percentage points), or the tax on their transaction value, whichever is higher (Rule 44).
Statutory text as published on the CBIC tax information portal, as on 03.10.2026; the numbered notes record each amendment. Official source
Common questions
- Can GST registration be cancelled retrospectively?
- Section 29(2) allows it, but courts require objective reasons and a specific proposal in the show cause notice; in Pratima Tyagi (Delhi HC, 2023) a cancellation back-dated to 2017 was moved forward to the date of the taxpayer's application.
- What happens to ITC on stock when registration is cancelled?
- An amount equal to the credit on stock and capital goods (or tax on their value, if higher) must be paid under section 29(5).
Commentary and case notes checked against the judgments and CBIC sources on 04.10.2026.
What it means
The registered person, or legal heirs on death, may apply when the business is discontinued, transferred, amalgamated or demerged, the constitution changes, or the person is no longer liable or wishes to give up voluntary registration (clause (c) as substituted by the Finance Act, 2020 from 01.01.2021). From 01.02.2019 the registration may be suspended while the application is pending, during which no returns are required (Rule 21A).