The Goods and Services Tax Network (GSTN) launched a feature in December 2022 enabling taxpayers to initiate drop proceedings via the GST portal. This allows them to reactivate their suspended Goods and Services Tax Identification Number (GSTIN) or registration. This guide details eligibility for the facility, its availability, the procedural steps, and alternatives for those unable to use it or who have exceeded the stipulated deadlines.

When Can a GSTIN Be Suspended?

A taxpayer's GST registration or GSTIN may face suspension if they consistently fail to file their GST returns. Monthly filers face suspension after six consecutive months of non-filing, while quarterly filers are affected after two consecutive quarters. Even if cancellation proceedings are underway, a tax official can initiate suspension by issuing an automatic show-cause notice.

The legal basis for suspension and cancellation is found in Section 29(2) of the CGST Act, coupled with Rules 21(h) and (i) of the CGST Rules, effective from October 1, 2022. Specifically, GST registration suspension falls under the proviso to Section 29(2) of the CGST Act, read with Rule 21A of the CGST Rules. For these purposes, GST returns primarily refer to Form GSTR-3B, as stipulated by Section 39(1) of the CGST Act.

For example, a large manufacturer failing to submit monthly GSTR-3B from May to October 2022 would see their GST registration temporarily suspended. Similarly, a small law firm using the QRMP scheme that misses quarterly GSTR-3B filings for the quarters ending June 30 and September 30, 2022, would also have their GST registration temporarily suspended.

Consequences of GST Registration Suspension

When a GST registration is suspended under Rule 21A(2), the taxpayer faces several restrictions during the suspension period. They are prohibited from:

• Making taxable supplies of goods and services, issuing tax invoices, or collecting taxes.
• Filing current GSTR-3B returns without first submitting all outstanding returns from prior periods.
• Receiving any refunds under GST.

Restoring a Suspended GSTIN

A suspended GSTIN can be reactivated or revoked once the taxpayer rectifies the initial non-compliance. A canceled or suspended GST registration is automatically restored on the GST portal after the taxpayer submits all their overdue GST returns.

To illustrate, if M/s ABC Ltd submits all outstanding returns by December 2022, its previously suspended GST registration will be reinstated. Similarly, if M/s XYZ & Associates filed their pending quarterly returns in November 2022, their suspended GSTIN would be revoked.

In situations where a canceled GST registration requires restoration, the government permits taxpayers to restore or revoke the suspension of their GST registration or GSTIN. This involves opting for automated drop proceedings, which are triggered once the pending GST returns are filed. The 'Initiate Drop Proceeding' option is then utilized, as detailed subsequently.

Eligibility for 'Initiate Drop Proceedings'

The 'Initiate Drop Proceedings' facility is exclusively available to businesses whose GST registration was suspended on or after December 1, 2022. Additionally, the suspension must have resulted from the non-filing of GSTR-3B for either six consecutive months or two consecutive quarters, depending on the filing frequency.

Although briefly unavailable in December, the facility was restored, allowing a limited number of taxpayers to benefit. Businesses that have submitted their overdue monthly or quarterly returns can use this process to revoke their GST registration suspension. Consequently, GST registrations suspended before December 1, 2022, due to non-filing of returns, are not eligible for restoration through this specific procedure.

Locating the 'Initiate Drop Proceeding' Facility

The 'Initiate Drop Proceeding' feature has been accessible on the GST portal since early December 2022, following a user's login, despite a brief temporary unavailability. To locate this facility, users should navigate to 'Services,' then 'User Services,' select 'View Notices and Orders,' and finally click on 'Initiate Drop Proceeding.'

Step-by-Step Guide to Restore GSTIN Using 'Initiate Drop Proceeding'

Typically, a suspended GST registration is reactivated within 15 minutes of submitting all outstanding GSTR-3B returns. If the revocation does not happen automatically, taxpayers can initiate drop proceedings. This facility is used when the GSTIN status remains 'Suspended' instead of automatically becoming 'Active' after filing all overdue returns.

Here is the step-by-step process for using the 'Initiate Drop Proceeding' facility, where the suspended GSTIN does not get auto-restored upon filing all the pending returns:

• Step 1: Log in to the official GST portal.
• Step 2: Navigate to the 'Services' menu, then select the 'User Services' tab. From the displayed list, click on 'View Notices and Orders.'
• Step 3: Locate the relevant message box and click the 'Initiate Drop Proceeding' button next to it.
• Step 4: The system will then confirm that the drop proceedings have been successfully initiated.

Once this process is completed, there is no further waiting period required for the GST registration to be restored, as the proceedings are automatically dropped.

Alternatives for Ineligible Taxpayers

If a GST registration was suspended before December 1, 2022, due to non-filing of GSTR-3B, businesses cannot utilize the automated steps mentioned above for restoration. In such scenarios, taxpayers must contact their jurisdictional tax officer to revoke the suspended GST registration, as only these authorities can officially drop such proceedings.

Additionally, if a business has submitted all outstanding returns but missed the deadline for responding to a show-cause notice regarding GST registration cancellation, the taxpayer must also consult their jurisdictional tax officer for guidance on the next steps.