SURRENDER 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 Rules

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 had been 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.

Circumstances for Surrender

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

(i) Death of proprietor

(ii) Ceases to provide the taxable service

(iii) Change in the constitution of business

(iv) Turnover is below the threshold limit

(v) Shifting the business premises from one jurisdiction to another jurisdiction

(vi) Applying for centralized registration by surrendering the single registration of other offices/branches.

Procedure for Surrender

Trade Notice No. 18/2013-ST, dated 19.12.2013 issued by the office of the Commissioner of Service Tax, Mumbai-I explains the procedure for surrender and cancellation of service tax registration. The surrender of registration is of two types -

• Assessee who has obtained registration and migrated to ACES and
• Assessee who obtained registration prior to 01.04.2010 and has not migrated to ACES.

Assessees are required to apply for surrender of Service Tax registration online. The procedure for online surrender is as follows: -

(i) The application for surrender of registration certificate shall be filed online using the ACES module on www.aces.gov.in

(ii) The assessee who has misplaced the User-id and password for transacting in ACES may approach the ‘Help Desk’ of the respective division alongwith filled in application for generating T-Pin

(iii) On successful filing of the application, the assessee is to take print out of the application generated by ACES

(iv) The said printed application is to be signed by the assessee and to be submitted to the jurisdictional Superintendent or Superintendent(s) of ‘Centralized Surrendered Cell’ in the concerned Division either in person or by post along with the following documents -

• Application form and undertaking for surrender of service tax registration number
• 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
• Copies of Profit and 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
• Details of show cause notice pending for adjudication
• Details of confirmed demands
• Details of court cases
• Details of audit conducted
• In case of death of proprietor, the death certificate of the proprietor
• In case of change in constitution, necessary documents showing the change of constitution
• In case of merger or acquisition, necessary documents such as order passed by the High Court or Article of Association to that effect
• In case of centralized registration, copy of centralized registration showing the premises for which surrender application is being submitted
• In case of multiple registration, copy of registration certificate for which the applicant wants to continue the registration.

(v) In case the assessee has not filed ST-3 returns it is not required to file fresh return for surrender purpose, if his taxable turnover is below the threshold exemption. The fact of non-filing of return shall be mentioned in the undertaking to be given.

(vi) In case Profit and Loss Account and Balance Sheet has not prepared, the applicant may submit copies of Income tax returns for the said period. If income tax return has also not been filed the applicant should provide some evidence like bank statement to satisfy the office about correctness of reason for surrender.

• The assessee has to submit the complete set of hard copies within 15 days of submission of online application; otherwise the application will be rejected;

• 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 Inspect 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;
• The Superintendent may require further information like re-conciliation of the income shown in Profit and Loss Account with the taxable income declared in ST-3 return; This reconciliation is not necessary if assessee taking centralized registration or in case of shifting of office from one jurisdiction to other jurisdiction or multiple registration;
• 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 case of any difficulty, Assistant or Deputy Commissioner of the concerned division may be approached for the resolution of grievance.

For applicants having registration prior to 01.04.2010 who have not migrated to ACES system, it is not necessary to apply for online and then surrender registration certificate online. They may apply for surrender of certificate by way of a manual application, along with other documents as required. The Department has issued instruction to liberally cancel the registration for assessee. In this case, the intimation for cancellation shall be sent by post.

Judicial Pronouncements

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 non-existent firm, was not valid in law. Further undertaking from legal heirs was for pending dues, not for future demands.

Cancellation of Certificate

Rule 4(9) 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.