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CA Final · Indirect Tax Laws · Registration

Mehta Traders, a registered regular taxpayer in Pune, discontinued its business and applied for cancellation of registration. Which statement is correct about the effect of cancellation under the CGST Act, 2017 on its past liabilities?

Liability for periods before cancellation continues. Under section 29(3), cancellation does not affect the person's liability to pay tax and other dues or discharge obligations for earlier periods, whether those dues are determined before or after the date of cancellation.

  1. ACancellation extinguishes all tax liability for periods before the date of cancellation
  2. BLiability for earlier periods continues, whether or not the tax and dues are determined before or after the date of cancellationCorrect
  3. CLiability for earlier periods continues only if it was determined before the date of cancellation
  4. DLiability for earlier periods continues only for the last financial year before cancellation

Explanation

Section 29(3) states that cancellation does not affect the liability to pay tax and other dues or to discharge any obligation for any period before the date of cancellation. This holds whether the dues are determined before or after cancellation. The option limiting liability to dues already determined is wrong because the Act expressly covers later determination.

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