Cancellation or suspension of registration
Section 29, CGST Act
Straight from CBIC
Official source, not a summary of a summary
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Amendment history
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GST registration can be cancelled – by you (e.g. business closed, turnover below limit, opting out) or by the officer (including from a back date) for reasons like non-filing of returns, rule violations, not starting business, or registration obtained by fraud. You get a hearing first, and the registration can be suspended while cancellation is decided. Cancellation does not wipe out past dues, and you must reverse/pay the ITC on stock and capital goods you hold at cancellation.
What this means in practice
The parts that actually decide cases — the things a practitioner checks first.
Suspension under Rule 21A is automatic from the date you apply for cancellation, and the officer may suspend where returns are missing or GSTR-1 and GSTR-3B differ significantly. A suspended person cannot make taxable supplies or claim a refund.
Cancellation with retrospective effect is common but must be reasoned – an order that cancels from a back date without saying why is routinely set aside.
Cancellation does not extinguish liability for the period before it, and the credit on stock and capital goods held on that date must be reversed in REG-16.
Non-filing grounds: six continuous months for a normal taxpayer, three consecutive tax periods for a composition taxpayer.
Questions people actually ask
Real questions we get on this provision, answered straight.
The department cancelled our registration from a date two years back. Can they?+
Section 29(2) allows cancellation from a retrospective date, but the order must record why that date was chosen and you must have been heard. A bare retrospective cancellation – especially one that strips your customers of credit for periods when you were filing – is challengeable on that ground.
How this provision is built
The skeleton, clause by clause — useful when a notice cites a specific sub-clause.
The exact words of the law
1,673 characters, uneditedReproduced from the CBIC text. We explain it above — but you should always be able to read it yourself.
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(1) The proper officer may (suo-motu or on application by the registered person / legal heirs on death) cancel registration where
(a) business discontinued/transferred/amalgamated/demerged/disposed;
(b) change in constitution of business;
(c) the taxable person is no longer liable under s.22 or s.24 or intends to opt out of voluntary registration under s.25(3). Proviso: registration may be suspended during pendency of cancellation proceedings filed by the registered person.
(2) The proper officer may cancel from any date, including retrospectively, where
(a) prescribed provisions/rules contravened;
(b) a composition (s.10) person has not furnished the return for a financial year beyond three months from the due date;
(c) any other registered person has not furnished returns for such continuous tax period as may be prescribed;
(d) a voluntary registrant has not commenced business within six months;
(e) registration obtained by fraud, wilful misstatement or suppression of facts. Provisos: hearing required; registration may be suspended during pendency of cancellation proceedings.
(3) Cancellation does not affect liability to pay tax/dues for any period before cancellation.
(4) Cancellation under SGST/UTGST is deemed cancellation under this Act.
(5) On cancellation, pay by debit to electronic credit/cash ledger an amount equal to ITC on inputs in stock / in semi-finished or finished goods / capital goods or plant & machinery on the day before cancellation, or the output tax payable, whichever is higher (for capital goods, ITC reduced by prescribed percentage or tax on transaction value, whichever higher).
(6) The amount is calculated as prescribed.
High Court cases on this section
Judgments in our index that cite this provision. Being listed does not make a case good law — it may have been appealed or distinguished since. Read it before relying on it.
Subhash Kumar Sah v. Commissioner, CGST and CX
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MAA LUXMI ENTERPRISES v. COMMISSIONER, CENTRAL GOODS AND SERVICES TAX AND ANOTHER
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M/S DHIR ENTERPRISES v. COMMISSIONER, CENTRAL GOODS AND SERVICES TAX AND ANOTHER
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M/S FRIEND ENTERPRISES v. COMMISSIONER, CENTRAL GOODS AND SERVICES TAX AND OTHERS
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SURYA BUILD CREATIONS v. COMMISSIONER STATE GOODS AND SERVICES TAX
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M/s. Hithaishi Infra Machine v. The Assistant Commissioner (ST) (FAC)
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M/s. Manikanta Enterprises v. The Deputy State Tax Officer
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M/s Rayees Metals v. Deputy State Tax Officer
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10 more on record. Search all GST case law →
What changed, and when
The amendment trail, newest first — because the version that applies to your case depends on the period.
2022-10-01 · Cancellation grounds 29(2)(b) & (c) reworded
(b) composition dealer: ‘return for a FY beyond three months from due date’ (was ‘three consecutive tax periods’); (c) ‘such continuous tax period as may be prescribed’ (was ‘continuous period of six months’).
2021-01-01 · Clause (1)(c) reworded to include voluntary opt-out
Allowed cancellation where a voluntary registrant opts out.
2019-02-01 · ‘or suspension’ added + suspension provisos
Introduced suspension of registration during cancellation proceedings.
2017-07-01 · Commenced
Original cancellation provision.
Where this comes from
Text reproduced from the Central Board of Indirect Taxes and Customs, as available on 2026-09-05. The explanation and practice notes above are GSTZone’s own, written for this hub. If you spot anything out of date, tell us and we’ll fix it — this hub is checked daily against CBIC.
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