GST office sent a show-cause for cancellation: what do I reply?

You log in to the GST portal and find a notice. The heading says "Show Cause Notice for Cancellation of Registration". It is in FORM GST REG-17. It says your GST registration may be cancelled.

Do not ignore it. A show-cause notice is not a cancellation. It is the officer asking you to explain. You still have a chance to be heard, and the law gives you a short, fixed window to use it.

This article is only about that notice and your reply to it. What happens if the registration has already been suspended, or already cancelled, is a separate stage with its own rules.

Your situation: what the notice actually is

The law lets the GST officer (the "proper officer") cancel a registration on his own motion in certain cases (s.29(1) and s.29(2), Central Goods and Services Tax Act 2017). When the officer has reason to believe a registration is liable to be cancelled under section 29, he must issue a notice in FORM GST REG-17. The notice asks you to show cause, in plain words to explain, why the registration should not be cancelled (rule 22(1), Central Goods and Services Tax Rules 2017).

Two points protect you.

First, the officer cannot cancel without hearing you. The Act says so directly: the proper officer "shall not cancel the registration without giving the person an opportunity of being heard" (proviso to s.29(2), CGST Act 2017). Your reply is how you use that opportunity.

Second, the notice is issued only where the officer has reason to believe the registration is liable to be cancelled under section 29 (rule 22(1), CGST Rules 2017). Read it line by line. The reason written in it is what you need to answer.

The grounds the officer can rely on

Cancellation on the officer's own motion falls under section 29(2). The grounds listed there are:

You contravened provisions of the Act or rules that are prescribed for this purpose (s.29(2)(a)).
You pay tax under the composition scheme (section 10) and have not filed the return for a financial year beyond three months from its due date (s.29(2)(b)).
You are any other registered person and have not filed returns for such continuous tax period as is prescribed (s.29(2)(c)).
You took voluntary registration and have not started business within six months of registration (s.29(2)(d)).
The registration was obtained by fraud, wilful misstatement or suppression of facts (s.29(2)(e)).

Rule 21 fills in the detail. A registration is liable to be cancelled if the person, among other things (rule 21, CGST Rules 2017):

does not conduct any business from the declared place of business (rule 21(a));
issues an invoice or bill without supply of goods or services, in violation of the Act or rules (rule 21(b));
avails input tax credit in violation of section 16 or the rules (rule 21(e));
furnishes outward supplies in FORM GSTR-1 that exceed what is declared in the valid return under section 39 (rule 21(f));
as a monthly return filer, has not filed returns for a continuous period of six months (rule 21(h));
as a quarterly return filer, has not filed returns for a continuous period of two tax periods (rule 21(i)).

Match the ground in your notice to this list. That tells you what the officer thinks went wrong, and so what your reply has to show.

The deadline clock

The clock is short.

You must show cause "within a period of seven working days from the date of the service of such notice" (rule 22(1), CGST Rules 2017). The reply must be furnished in FORM REG-18 within that same period (rule 22(2), CGST Rules 2017).

Count from the date the notice was served on you. Note the service date and any reply date shown on the notice, and keep a screenshot of it. The rule does not define how working days are counted, so do not rely on a close count. If you are near the limit, file the reply now. Rule 22 itself provides no extension of the seven working days.

What the officer must do after your reply

Once you reply, the law gives the officer two paths.

If the reply is satisfactory, the officer "shall drop the proceedings and pass an order in FORM GST REG-20" (rule 22(4), CGST Rules 2017). Your registration continues.

If the reply is not satisfactory and the registration is liable to be cancelled, the officer passes an order in FORM GST REG-19. The rule requires this within thirty days from the date of the reply to the show-cause notice. The order cancels the registration from a date the officer decides. It also directs you to pay arrears of tax, interest or penalty, including the amount payable under section 29(5) (rule 22(3), CGST Rules 2017).

So the sequence is: REG-17 notice, your REG-18 reply, then either REG-20 (dropped) or REG-19 (cancelled).

Step by step: how to reply

Read the notice fully. Note the ground, the date of service and the reply due date.
Collect the facts. Pick the documents that answer the ground. Examples follow below.
Log in to the GST portal. Open the notice and reply in FORM REG-18, as rule 22(2) requires. Attach your supporting documents if the portal allows it.
Write a short, factual reply. State the ground in the notice. Then answer it with facts and attach proof.
Submit and download the acknowledgement. Keep it with the notice.
Track the order. Watch the portal for FORM REG-20 or FORM REG-19.

Check the current portal path and the attachment limits on the GST portal before you file. They are not part of the law text.

What to put in the reply, by ground

Keep the reply matched to the ground, nothing wider.

Returns not filed (rule 21(h), rule 21(i), s.29(2)(b) or (c)). The strongest answer may be to file the pending returns. For a notice on the non-filing grounds in section 29(2)(b) or (c), the law has a shortcut. If instead of replying you "furnish all the pending returns and make full payment of the tax dues along with applicable interest and late fee", the officer "shall drop the proceedings and pass an order in FORM GST REG-20" (proviso to rule 22(4), CGST Rules 2017). That route depends on clearing everything: all returns, all tax, interest and late fee. If you cannot clear it all inside the window, file a reply in REG-18 explaining the position and attach what you have filed.

Not conducting business from the declared place (rule 21(a)). Your reply can show that you do operate from that address. Useful proof: rent agreement or ownership paper, utility bill, recent invoices carrying the address, a photograph of the premises with the signboard. If the address has changed, say so and show whether you filed the change of address with the portal.

Invoices without supply (rule 21(b)). Show the underlying supplies: purchase orders, delivery records, e-way bills where used, payment trail, and the books. Show the transaction.

Input tax credit taken in violation of section 16 (rule 21(e)). Show that the credit was properly available: tax invoices, proof of receipt of goods or services, proof that the supplier's tax has reached the government, and payment to the supplier. If the credit was wrongly taken, the clean answer is to say so and reverse it with interest. A reply that explains and corrects is better than one that denies.

GSTR-1 greater than the return under section 39 (rule 21(f)). Reconcile the two. Put a short table in the reply: tax period, GSTR-1 value, return value, reason for the gap. Then show any correction made.

Voluntary registration but no business started within six months (s.29(2)(d)). Show that business began, with first invoices, or explain what stopped it and the steps taken.

Fraud, wilful misstatement or suppression of facts (s.29(2)(e)). This is the most serious ground. Do not write this one alone. Gather the registration documents and the facts of what was declared, and have a CA review your facts before you submit.

If the notice gives no clear ground, say so in the reply and ask for it.

What not to do

Do not ignore the notice. If the registration remains liable to be cancelled, the officer can cancel it by an order in FORM GST REG-19 (rule 22(3), CGST Rules 2017).
Do not wait till the last day if you can avoid it. The window is seven working days.
Do not reply with a general plea. "Please do not cancel" is not an answer to a ground.
Do not file the reply and stop filing returns. The returns obligations carry on. Any later default can raise a fresh notice.
Do not think cancellation wipes out dues. It does not. Cancellation does not affect your liability to pay tax and other dues for any period before cancellation, whether determined before or after (s.29(3), CGST Act 2017).
Do not forget the stock-in-hand payment. If the registration is cancelled, you pay, by debit in the electronic credit or cash ledger, an amount equal to the input tax credit on inputs held in stock, inputs in semi-finished or finished goods, and capital goods, or the output tax payable on them, whichever is higher; for capital goods the credit is reduced by prescribed percentage points (s.29(5), CGST Act 2017). If you were required to file returns under section 39(1), a final return follows within three months of the date of cancellation or the date of the order, whichever is later (s.45, CGST Act 2017).

If the registration is cancelled anyway

You have two routes after a REG-19 order.

An application for revocation in FORM GST REG-21, within ninety days from the date of service of the cancellation order (rule 23(1), CGST Rules 2017). If the cancellation was for failure to file returns, the returns must be filed and the tax, interest, penalty and late fee on them paid before you apply (second proviso to rule 23(1)).

An appeal to the Appellate Authority within three months from the date the order is communicated to you (s.107(1), CGST Act 2017).

Both are separate procedures, covered elsewhere.

What to do now

Next step: Open the notice on the portal, note the ground, and file your FORM REG-18 reply with documents (rule 22(2), CGST Rules 2017). If the ground is non-filing of returns, check whether filing all pending returns with tax, interest and late fee is the quicker route (proviso to rule 22(4), CGST Rules 2017).
Deadline: Seven working days from the date the notice was served on you (rule 22(1), CGST Rules 2017).
Consequence of missing it: The officer can cancel the registration by an order in FORM GST REG-19 (rule 22(3), CGST Rules 2017), from a date he decides, including a retrospective date (s.29(2), CGST Act 2017). Your dues for the earlier period stay payable (s.29(3), CGST Act 2017).

Have a CA review your facts before you act or file.

FAQs

Is a REG-17 notice the same as cancellation?
No. It is a notice asking you to explain why your registration should not be cancelled (rule 22(1), CGST Rules 2017). Cancellation happens only by a later order in FORM GST REG-19 (rule 22(3)).

How long do I have to reply?
Seven working days from the date the notice was served on you (rule 22(1), CGST Rules 2017). The reply goes in FORM REG-18 (rule 22(2)).

Can the officer cancel without hearing me?
No. The officer shall not cancel the registration without giving you an opportunity of being heard (proviso to s.29(2), CGST Act 2017). Your reply is your chance to put your case.

My notice is about missing returns. Do I still have to write a reply?
Not if you instead file all the pending returns and pay the full tax dues with interest and late fee. The officer then drops the proceedings by FORM REG-20 (proviso to rule 22(4), CGST Rules 2017). This shortcut is for notices on the grounds in section 29(2)(b) or (c).

How soon must the officer decide?
If the officer is not satisfied after your reply, the cancellation order in FORM REG-19 must be passed within thirty days from the date of the reply (rule 22(3), CGST Rules 2017). If satisfied, the officer drops the proceedings by FORM REG-20 (rule 22(4)).

Does cancellation clear my old GST dues?
No. Cancellation does not affect your liability for any period before the cancellation, whether the dues are determined before or after (s.29(3), CGST Act 2017).

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