SURRENDER AND CANCELLATION OF REGISTRATION CERTIFICATE

[Dr. Sanjiv Agarwal]

Surrender of Certificate

Every person, who ceases to provide taxable services shall surrender his certificate of registration immediately to Superintendent of Central Excise. Temporary suspension of business or getting no business for the time being will not require surrendering of registration. No penalty had been prescribed for not surrendering the registration certificate on ceasing to provide taxable service. Where a registered assessee transfers his business, the transferee shall have to obtain a fresh certificate of registration. Similarly, conversion of individual membership into partnership firm or corporate membership and vice versa will also require fresh registration.

Service Tax (Amendment) Rules, 2006 amended Rule 4 w.e.f. 1-3-2006 (vide Notification No. 5/2006-ST dated 1-3-2006 as follows-

• In sub-rule 7, it was provided that registration certificate for surrender has to be submitted to Superintendent of Central Excise having Jurisdiction over the assessee.
• It shall be the duty of the Superintendent of Central Excise to ensure that assessee who has surrendered his registration certificate for cancellation has paid all monies due to the Central Government under Chapter V of Finance Act, 1994 and rules or notifications issued thereunder, and then only cancel the registration.

Registration granted to a service provider is valid unless the same is surrendered or cancelled. However, existing registration certificates should be got amended in case of change in description of taxable services provided or to be provided.

Rule 4 of the Service Tax Rules, 1994 specifies the procedure for registration under service tax. As per Rule 4(7), every registered assessee, who ceases to provide the taxable service for which he is registered, shall surrender his registration certificate immediately to the Superintendent of Central Excise. Rule 4(8) provides that on receipt of the application for surrender, the Superintendent of Central Excise shall ensure that the assessee has paid all monies due to the Central Government under the provisions of the Act, and the rules and the notifications issued there under, and thereupon cancel the registration certificate.

The service tax assessees can surrender the registration certificate in any of the following circumstances-

1. Death of proprietor
2. Ceases to provide the taxable service
3. Change in the constitution of business
4. Turnover is below the threshold limit
5. Shifting the business premises from one jurisdiction to another jurisdiction
6. Applying for centralized registration by surrendering the single registration of other offices/branches.

Broadly, surrender/cancellation of the service tax registration is applied for following reasons:-

1. Assessee’s turnover is below the threshold limit.
2. Change in the constitution of assessee, say from partnership to company or amalgamations.
3. Death of proprietor.
4. Assessee closing down his taxable service business.
5. Assessee has taken centralized registration and hence wants to surrender his other multiple registrations pertaining to the branches.
6. Assessee has shifted its office from the jurisdiction of one Division/Commissionerate to another and instead of requesting for change in the location code and premises code of the assessee, a fresh registration has been taken at the new address. Therefore a need arises for Surrender of the old registration.
7. Due to technical error in the system, the assessee has been issued multiple registrations for the same address. In that case, the additional registrations are required to be surrendered.

The assessees who wish to surrender their registration certificates shall file their application online using the ACES module on www.aces.gov.in. On successful filing of the online application, the assessee shall submit the copies of documents mentioned below with signed copy of printout of the application generated by the ACES System to the jurisdiction Group Superintendent or Superintendent(s) of ‘Centralized Surrender Cell’ in the concerned Division office. For, surrender application submitted by an assessee who had obtained registration prior to 01.04.2010 and not migrated to ACES, requirement of online filing of application has been done away with and procedure given below may be referred.

All the assessees falling under category (a) to (g) above are required to submit following documents:

1. Application Form & Undertaking for surrender of Service Tax Registration.
2. Copies of ST-3 returns filed with the department from the date of taking registration till the date of surrender but up to a maximum of last six returns only.

In case the assessee has not filed ST-3 returns for the period mentioned above, then it is not necessary for him to file the fresh return for surrender purpose if his taxable turnover is below the exemption limit. He can apply for waiver of penalty under Rule 7C of STR for non-filing of returns. The fact of non-filing of return should be clearly mentioned in the undertaking.

3. Copies of Profit & Loss Account and Balance Sheet from the date of taking registration to the date of surrender but for a maximum of last 3 financial years only. However, if Balance Sheet or Profit & Loss Statement has not been prepared, the applicant may submit copies of Income Tax Return for the said period. If said return has also not been filed, then applicant should provide some evidence like Bank Statement to satisfy the office about correctness or reason for surrender. [Not required for category (e) & (g)].
4. Details of Show Cause Notice pending adjudication, details of confirmed demands, details of court cases, details of audit conducted.

In case of an assessee failing under category (c) above, the death certificate of the proprietor may also be enclosed along with application form.

In case of change of constitution [category (b)], the necessary documents like Partnership deed or Articles of Association etc. showing change of constitution may be enclosed along with application for surrender. In case of merger or acquisition, necessary documents such as order passed by the High Court or Article of Association to that effect, may be enclosed along with application of surrender.

In case of assessee taking centralized registration [category (e)], the copy of centralized registration certificate, showing the premises for which surrender application is being submitted, should also be enclosed along with the application for surrender.

For cases covered by category (g) above, copy of registration certificate for which the applicant wants to continue the registration should also be submitted along with the application for surrender.

After submission of the required documents personally or by post, the Superintendent may require further information like reconciliation of the Income shown in the Profit & Loss Account with the taxable income declared in ST-3 return. However, reconciliation information would not be necessary in case of assessee with centralized registration or in case of shifting of office from one jurisdiction to other jurisdiction or in case of technical error resulting in multiple registration or in case of turnover as per income statement / profit & loss account being below exemption limit.

The assessee should submit the required documents with proper indexing of all enclosures. As far as possible, all these documents will be verified by the Superintendent or Inspector at the time of their submission itself. In case of deficiency in submission of documents, the same shall be informed to the assessee at the time of receipt of the documents. It may be noted that if the assessee fails to submit the complete set of hard copies within 15 days of submission of online application, his application is liable to be rejected.

In case the applicant has taken service tax registration prior to 01.04.2010 and has not migrated to ACES system, in that case it is not necessary for them to migrate to ACES for surrender of their registration. Therefore, they can apply for surrender by a manual application,, alongwith other documents as required without filing online surrender application. Instruction have been issued to liberally cancel the registration for assessee who had taken registration in the past when there was no threshold limit. Further, in those cases, the intimation for cancellation may be sent by post.

The assessee who have misplaced the User-ID & Password for transacting in ACES may approach the ‘Help Desk’ of the respective Division along with filled in application Form for generating T-pin. The Superintendent shall process the application for surrender of registration and after successful cancellation of the registration, will inform the assessee through e-mail.

In Need-wise Advertising Pvt Ltd v. CST, Ahmedabad 2010 (11) TMI 211 - CESTAT, AHMEDABAD, where assessee surrendered the registration certificate and revenue interpreted such surrender as deliberate intention not to pay service tax, it was held that surrender of registration should be taken as made on the belief of non requirement of such registration. The onus is on the revenue to find out cause of surrendering registration. If action is not taken at the time of surrender of registration certificate, the same can not be questioned subsequently.

In Amalner Cooperative Bank Ltd. v. CCE 2012 (5) TMI 422 - CESTAT, MUMBAI , it was held that interpretation of surrender as revealing deliberate intention not to pay service tax is not sustainable as surrender of registration to be taken as made on belief of non-requirement of such registration. Therefore, onus is on revenue to find out the cause of surrendering registration if action is not taken at the same time, the same cannot be questioned subsequently.

In CCE v. Shree Ambica Steel Industries 2013 (1) TMI 685 - CESTAT, NEW DELHI , where proprietor of assessee– sole proprietorship firm died and registration of firm was cancelled on undertaking of legal heirs that they would pay all pending dues as and when settled, and Department issued show cause notice subsequently, it was held that since sole proprietorship firm has no legal entity independent of its proprietor, assessee firm ceased to exist on the date of death of proprietor and as such, SCN being against an nonexistent firm, was not valid in law. Further undertaking from legal heirs was for pending dues, not for future demands.

Cancellation of Certificate

Rule 4(8) provides for cancellation of registration certificate where the assessee makes an application for cancellation. It may be noted that the cancellation of registration may be done when the assessee applies for cancellation on his own or surrender his certificate under Rule 4(7) and not in other cases. It may be noted that there is no statutory requirement for the assessee to make any application for cancellation in every case, but only under Rule 4(7) W.e.f. 1st March, 2015, sub-rule (9) has been inserted to provide for conditions, safeguards and procedure for registration. Accordingly, Order No. 1/2015-ST dated 28-2-2015 was issued.