De Registration Suspension Blacklisting and Restoration of Sales Tax Registration: We often hear in the news that tax evasion worth billions of rupees has come to light, some business people have been blacklisted, their sales tax number has been suspended or their business has been closed. Today we will discuss the procedure for blacklisting a person, how to restore GST status if blacklisted, and what is the complete procedure for de-registration from sales tax.
How to Apply for De-Registration of Sales Tax
If a person wants to de-register from sales tax because his supply has become exempt from tax or his business has ceased, he can file an application for de-registration. Form STR-3 can be submitted both online and by mail.
The Commissioner will decide on it within seven days. If there are any liabilities, he will pay them to the revenue authority.
What Happens After a De-Registration Request?
- When a person files an application for de-registration, he will not be allowed to issue further invoices and file returns (Annex-C, Annex-D)
- As long as the process of de-registration is going on, he will not get any input adjustment or refund during this period. Those to whom he has issued invoices will also not be able to claim input tax.
- After receiving the application for de-registration, the registered person shall have restricted to file his monthly return, unless he is de-registered or his application is rejected.
Commissioner’s Tax Assessment Notice
If the Commissioner wants his tax liability to be assessed, he will issue a notice and ask for all records from the applicant. After completing the process, if any liability arises, the Commissioner will issue a notice to pay the liabilities and finally the final return will be filed.
Why sales tax registration is suspended
The power to suspend GST Enrolment lies with the Commissioner, who may suspend it temporarily for reasonable cause.
Tax Fraud
- If a registered person issues fake invoices, evades tax or is Involved in any activity that constitutes tax fraud.
- The address provided at the time of Enrolment is not available.
- He does not provide records when requested by the FBR or does not allow access to the business to the FBR audit staff.
- Or any other reason that the Commissioner considers appropriate.
De Registration Suspension Blacklisting and Restoration of Sales Tax Registration: Other Reasons
There are certain restrictions and conditions applied in the IRIS system, if anyone violates these conditions or not meet the defined criteria, the system automatically suspends the GST Enrolment status without any prior notice
- The business activity or sales exceed five times his capital or liabilities.
- If he makes 10% of his purchases from a person or sells goods to a person who is himself suspended.
- If he does not file a return for three consecutive months or files a NULL return for six consecutive months.
Enforcement of suspension order
Since the suspension can only be temporary, the Commissioner shall send a notice of suspension of GST status to the taxpayer within seven days after the order is issued and shall direct him to submit a response within fifteen days.
If notice is not issued within seven days of the suspension order, the suspension order shall be deemed to be ineffective from the date of its issuance.
How to revoke suspension
If the taxpayer is not involved in any activity on the basis of which his GST Enrolment has been suspended and he wants to have the suspension lifted, he must respond to the notice. If the registered person proves that he is not involved in the charges listed in the suspension order, the Commissioner may, after being satisfied, issue an order lifting his suspension.
Why a person is blacklisted in sales tax
If the taxpayer failed to respond, to provide records or access to the business, or is found guilty, the Commissioner shall issue a blacklisting order.
The blacklisting order shall state for how long the person will not receive a refund, the input tax claimed will not be received, and if any recovery or penalty is to be imposed, that shall also be stated in the order.
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