GST cancellation & revocation lawyer in Patna
GST Cancellation & Revocation Legal Services – 2026 Complete Guide
Navigating the Goods and Services Tax (GST) framework in Bihar requires a clear understanding of your registration’s status. For a business owner, your GSTIN (GST Identification Number) is more than just a tax ID; it is your gateway to interstate trade, input tax credits, and legal compliance.
In 2025, the Bihar Commercial Taxes Department has tightened monitoring, making it essential to distinguish between a temporary “freeze” and a permanent “exit.”
Introduction & Key Concepts
A GST registration is not a permanent license. It is a compliance-based status that can be altered by you (the taxpayer) or by the authorities if rules are not followed.
Suspension (Temporary Freeze)
- Registration is valid but “frozen”
- No taxable supplies / no e-way bill
- ITC blocked for buyers
- Auto-revoked once default is cured
Cancellation (Legal Death)
- Registration becomes invalid
- Business must stop
- ITC lapses & must be reversed
- Revocation only within 270 days
2025 Update: GST portal enforces a strict 3-year return filing limit, making timely revocation critical.
Types of GST Cancellation
Voluntary Cancellation (Taxpayer Initiated)
This is a proactive “surrender” of the registration when a business owner in Bihar no longer requires it.
- Common Scenarios:
- Business Closure: Permanent shutdown of operations.
- Threshold Below Limits: Annual turnover falls below the Bihar threshold (typically ₹40 Lakh for goods, ₹20 Lakh for services).
- Change in Constitution: Transitioning from a Sole Proprietorship to a Partnership or Private Limited company (requires a new PAN-based GSTIN).
- The Process: * Form: Application must be filed in Form GST REG-16.
- Timelines: Must be filed within 30 days of the event (e.g., date of closure).
The “Clean Slate” Rule: You must pay all tax liabilities on closing stock (inputs and capital goods) and file a Final Return (GSTR-10) after the cancellation order is issued.
Suo Moto Cancellation (Department Initiated)
This is an “involuntary” cancellation by the Proper Officer (PO) in Bihar. It is often triggered by the system or a field visit.
The 2025 Compliance Triggers:
- Non-Filing of Returns: * Regular Taxpayers: Failure to file GSTR-3B for 6 consecutive months.
- Composition Taxpayers: Failure to file GSTR-4 for 3 consecutive tax periods.
- Rule 10A Violation (New for 2025): Failure to update valid bank account details within 30 days of registration or before the GSTR-1 due date now leads to auto-suspension, followed by Suo Moto cancellation.
- Fake Invoicing (Rule 21): Availing Input Tax Credit (ITC) without actual receipt of goods or services.
- Place of Business: Not conducting business from the address declared on the portal.
Cancellation by Legal Heirs
When a sole proprietor in Bihar passes away, the GSTIN does not automatically transfer. It must be legally closed.
- The Heir’s Responsibility: The legal heir must apply for cancellation using Form GST REG-16, selecting “Death of Sole Proprietor” as the reason.
- ITC Transfer: If the heir intends to continue the business under a new GSTIN, they must file Form GST ITC-02 to transfer the unutilized Input Tax Credit from the deceased’s account to the new entity.
- Documentation: Requires the Death Certificate and Succession Certificate (or an Affidavit from a Bihar court).
Important: The 3-Year “Hard Stop” Rule (Late 2025 Update)
As of December 1, 2025, the GSTN portal has implemented a strict time-barring mechanism. You are now prohibited from filing any return that is more than three years old. This means if your Bihar GSTIN was cancelled for non-filing in 2022, you must act before the 3-year window expires, or the ID may become permanently un-revocable.
GST Cancelled in Bihar?
We help revive GSTINs, reply to notices & file REG-21 professionally
Voluntary Cancellation (Step-by-Step)
- File all pending returns up to the date of closure.
- Login → Services > Registration > Application for Cancellation (REG-16).
- Select reason (closure / change in constitution).
- Declare stock values – inputs, semi-finished, finished, capital goods.
- Pay liability = higher of ITC on stock or output tax.
- Verify with DSC/EVC → ARN generated.
- Wait 30 days for REG-19 (approval) or REG-17 (queries).
- File GSTR-10 (Final Return) within 3 months of order.
Final Return (GSTR-10) mandatory within 3 months.
Suo Moto Cancellation & The "Civil Death" of Business
In Bihar, a Suo Moto Cancellation is often referred to by tax experts as the “civil death” of a business. It happens when the department—not the taxpayer—initiates the shutdown of a GSTIN due to non-compliance. Under the 2025 guidelines, the Bihar Commercial Taxes Department has automated many of these triggers.
Step 1: Identification of Default
The GST system (GSTN) flags your account. Common triggers in Bihar include failing to file GSTR-3B for 6 consecutive months or significant mismatches between GSTR-1 and GSTR-3B (Rule 21A).
Step 2: Suspension (Rule 21A)
Once a violation is flagged, your registration is suspended immediately.
- The “Frozen” Status: You will see a “Suspended” status on the portal.
- Restrictions: You cannot issue tax invoices, collect GST, or generate e-way bills for transporting goods across districts like Patna, Gaya, or Muzaffarpur.
Step 3: Show Cause Notice (Form GST REG-17)
The Proper Officer (PO) issues a notice asking: “Why should your registration not be cancelled?” * Where to find it: Login to the portal > Services > User Services > View Notices and Orders.
- Time to Reply: You have exactly 7 working days from the date of service.
Step 4: Taxpayer Reply (Form GST REG-18)
This is your critical window to save your business.
- If the reason was non-filing, the best defense is to file all pending returns (with interest and late fees) and then submit the ARN of those filings in your reply.
- If the reason was a “missing” business location, you must provide proof (GPS-tagged photos, electricity bills) that you are operating from the registered Bihar address.
Step 5: Final Order (Form GST REG-19 or REG-20)
- Success (REG-20): If the officer is satisfied, they issue Form GST REG-20, dropping the proceedings and reactivating your GSTIN.
- Failure (REG-19): If you don’t reply or the reply is rejected, the officer issues Form GST REG-19, which officially cancels your GSTIN, often with a retrospective (backdated) effect.
Step 6: File Appeal (Form GST APL-01)
Legal remedy against an adverse Order-in-Original.
Limitation Period: The appeal must be preferred within 3 months of the impugned order.
Condition Precedent: Admission is contingent upon a mandatory pre-deposit of 10% of the disputed tax.
Submissions: You must establish the order is bad in law, perverse, or violates Principles of Natural Justice (e.g., denial of audi alteram partem).
Critical 2025 Warning: The Rule 10A Trap
Many new businesses in Bihar are facing Suo Moto cancellation because they forget to link their bank account within 30 days of getting a new GSTIN. In 2025, the system now automatically suspends these accounts without manual intervention from an officer. Ensure your bank details are updated via a “Non-Core Amendment” immediately upon account opening.
Effects of Cancellation & Suspension (Parameter-Wise)
Understanding the operational differences between a “Suspended” and “Cancelled” status is critical for business owners in Bihar. While suspension is a temporary freeze that can often be resolved, cancellation is a legal termination that requires a formal revocation process to undo.
Comparison of Business Impacts (2025 Updates)
Parameter
Effect of Suspension (Rule 21A)
Effect of Cancellation (Section 29)
Taxable Supplies
Prohibited
Illegal
E-way bill
Blocked (supplier side)
Blocked
ITC for buyers
Not visible in 2B
Lapses
Returns
Disabled until revival
Only GSTR-10 required
Refunds
Paused
Only pre-cancellation dues
Bank a/c
High-risk flag
Closure risk
Automatic Revocation of Suspension
When does the system unfreeze you?
- All pending GSTR-3B & GSTR-1 filed + late fees paid → status flips to Active within 24-48 hrs.
- Rule 10A default → upload bank a/c via Non-Core Amendment → auto-revoke.
Manual Override – “Initiate Drop Proceeding”
If status still shows “Suspended” after compliance:
- Login → User Services > View Notices & Orders.
- Open the SCN → click Initiate Drop Proceeding.
- System verifies → instant restoration (no officer visit).
Button not visible? Default is fraud-related or manually suspended—file REG-18 reply & attend hearing.
Automatic Revocation
If your registration was suspended due to non-filing of returns (the most common reason in Bihar), the system is designed to help you.
- The Trigger: Once you file all your pending GSTR-3B and GSTR-1 returns and pay the associated late fees and interest, the GST portal’s automated logic checks your status.
- The Result: In most cases, the suspension is automatically revoked, and your status changes from “Suspended” to “Active” within 24–48 hours without any manual intervention from an officer.
- 2025 Rule 10A Update: If your suspension was due to missing bank account details, the suspension will also be automatically revoked as soon as you file a “Non-Core Amendment” adding your valid bank details.
“Initiate Drop Proceeding” (The Manual Override)
Sometimes, the system lags, and your status remains “Suspended” even after you have cleared all defaults. To fix this, you can use the self-service restoration tool on the portal.
Step-by-Step Procedure:
- Login: Access the GST Portal.
- Navigate: Go to Services > User Services > View Notices and Orders.
- Action: Look for the Show Cause Notice (SCN) that triggered the suspension.
- Click: Select the “Initiate Drop Proceeding” button.
- Confirm: The system will verify if the returns have been filed. If they have, it will instantly drop the cancellation proceedings and restore your GSTIN to “Active” status.
What if “Initiate Drop Proceeding” isn’t available?
If you don’t see this button, it usually means the suspension was not triggered by non-filing but by other reasons like Rule 21 (fraud/mismatches) or a manual suspension by your jurisdictional officer. In these cases, you must file a formal reply in Form GST REG-18 and may need to visit your local Bihar circle office (e.g., Patna South, Muzaffarpur West) for a personal hearing.
Revocation of Cancellation
If your registration has been cancelled Suo Moto by the Bihar tax authorities, you have a legal window to apply for its restoration. This process is called Revocation.
New 2025 Time Limits (Critical Update)
Under the latest amendments (Notification No. 38/2023 effective into 2025), the timelines for filing a revocation application have been significantly relaxed to prevent the permanent “civil death” of businesses.
- Standard Period: You must file Form GST REG-21 within 90 days from the date the cancellation order was served.
- Extension (Joint/Additional Commissioner): If you miss the 90-day window, you can apply for an extension of up to 180 additional days.
- Maximum Total Time: You now have a total of 270 days (90 + 180) to save your GSTIN.
- The “Point of No Return”: Beyond 270 days, the GST portal generally locks the revocation functionality. At this stage, your only recourse is filing a Writ Petition in the Patna High Court.
Filing Steps
- Services > Registration > Application for Revocation (REG-21).
- State reason (attach payment challans & cover letter).
- Verify DSC/EVC → ARN.
- Officer has 30 days to pass:
- REG-22 – approved, GSTIN restored.
- REG-23 – notice for further clarification (reply in REG-24 within 7 days).
- REG-05 – rejected → next step Appeal.
Retrospective cancellation? You must file returns for the entire cancelled period within 30 days of REG-22 order.
Pre-requisites
- File all pending returns up to cancellation date.
- Pay tax + 18% interest + late fees (₹10k cap/return).
Appeal Against Cancellation Orders
If your Revocation Application (REG-21) is rejected via Form GST REG-05, or if you missed the 270-day window for revocation, you are not out of options. The legal system provides a structured appeal mechanism to help Bihar businesses restore their “Active” status.
When to File an Appeal?
You should approach the First Appellate Authority in the following cases:
- Your application for revocation was rejected by the Proper Officer.
- Your GST was cancelled Suo Moto, and you have a strong legal justification for the delay in seeking revocation.
- You wish to challenge a retrospective (backdated) cancellation that is affecting your previous ITC claims.
Filing the Appeal (Form GST APL-01)
The appeal for GST cancellation must be filed digitally using Form GST APL-01 with the First Appellate Authority (Section 107 of the Bihar GST Act) within 3 months of the order date. A delay of up to 1 extra month may be allowed for “sufficient cause.”
Mandatory Pre-Deposit (2025 Rule): You must deposit 100% of the admitted tax liability and 10% of the disputed tax amount (maximum ₹25 crore). Per Patna High Court rulings, the 10% pre-deposit should typically be paid via the Electronic Cash Ledger.
Step-by-Step Procedure on the Portal
- Login to the GST Portal.
- Navigate to Services \> User Services \> My Applications.
- Select Appeal to Appellate Authority, then “New Application.”
- Enter the Cancellation Order number and select “Registration Order” as the type.
- Upload the detailed PDF Grounds of Appeal and the Statement of Facts.
- Submit via DSC or EVC.
Key Arguments for Success (Bihar GST Appeal)
When appealing, use these legal arguments:
- Fundamental Right: Cancellation violates the right to business (Article 19(1)(g)).
- Revenue Interest: A tax-paying, running business benefits Bihar more than a closed one.
- Proportionality: Argue cancellation is “disproportionate punishment” for minor defaults (e.g., non-filing).
Patna High Court Precedent: The Court often favors leniency and business continuity if the taxpayer agrees to pay all dues and file pending returns.
High Court Writ Jurisdiction (Article 226)
When all statutory doors—Revocation (REG-21) and First Appeal (APL-01)—are closed due to time-barring or technical rejections, the Patna High Court becomes the final “safety net” for Bihar taxpayers. Under Article 226, the Court can exercise its extraordinary jurisdiction to restore a GSTIN if it serves the interest of “Substantial Justice.”
When Statutory Remedies Fail
In 2025, the GST portal strictly enforces the 270-day limit (90 days + 180 days extension). Once this window passes, the portal effectively “deletes” the option to file for revocation. If you also missed the 3-month window for a formal appeal, you are legally “time-barred.”
At this stage, you cannot settle the matter with your local Bihar circle officer. You must file a Writ Petition in the Patna High Court to seek a “Mandamus” (a court order) directing the tax department to reactivate your registration.
The Patna High Court favors business continuity, often overruling rigid GST cancellation procedures if the taxpayer agrees to pay all dues. Key Bihar rulings include:
- “Non-Speaking Order” Doctrine: Orders like those in Manoj Kumar Sah and Brajesh Enterprises were quashed because the cancellation officer failed to provide clear, documented reasons.
- Maharaj Ji Enterprises (July 2025): A taxpayer with a prior unrevoked cancellation is not barred from seeking a fresh GST registration, provided they meet Section 29(2) and clear previous debts.
- Substantial Justice: Similar to the Tvl. Suguna Cutpiece case, Patna benches often direct restoration if the taxpayer agrees to file returns and pay interest, ensuring the state doesn’t lose future revenue.
2025 Caution: Court unlikely to help if cancellation was for fraudulent ITC or non-existent premises (JD Enterprises case).
Save Your Business from GST Cancellation
Don’t let a “Civil Death” sentence stop your trade in Bihar. Our experts help you file Form GST REG-21 and restore your status in record time.
✓ 10,000+ Successful Registrations | ✓ 99% Approval Rate | ✓ 24/7 Support