Indirect Tax Alert -GST Instruction – Guidelines for processing GST registration applications

The CBIC has recently launched a Special All-India Drive, vide Instruction no:01/2023-GST dated 4 May 2023¹, to curb fake GST registrations (which are obtained to claim bogus input tax credit (ITC)). In this regard, CBIC has also issued the following guidelines to strengthen and streamline the process of verification of registration applications:

• On receipt of a registration application, the proper officer will scrutinise and verify the said application along with the documents uploaded on the GST portal. The proper officer would also ensure that the documents uploaded by the applicant are legible, complete and relevant. Further, the details of the address of the principal and additional places of business along with corresponding documents viz., proof of address may be closely scrutinised by the proper officer.
• The Directorate General of Analytics and Risk Management (DGARM), in coordination with the Goods and Services Tax Network (GSTN), would determine the risk rating of each registration application based on data analytics and risk parameters and provide the same to the proper officer on regular basis. Special attention needs to be given to registration applications with a ‘High’ risk rating.
• The proper officer to check whether the GST registration(s) has been obtained on the same PAN earlier, either in the same or the other State. In such cases, the status of such PAN along with the compliance record of the GSTINs associated with such PANs may be checked on the portal. The proper officer shall give due attention to cases inter alia involving the following aspects:
  • Whether any GST registration obtained on the applicant’s PAN was previously -
    • Cancelled
    • Suspended at the time of verification of registration application
    • Rejected.
  • Whether the applicant’s place of business appears to be risky based on local risk parameters
  • Whether the proof of address of place(s) of business prima facie appears to be suspicious/ doubtful based on scrutiny of the registration application and the documents.
• Where the registration application is found to be deficient in terms of any information and/ or any requisite document or where the proper officer requires any clarification on any information or documents furnished in the ARN or respect of any other fact, he shall issue a notice to the applicant electronically in FORM GST REG-03 within the prescribed time limit.

• Additionally, the proper officer may seek the following clarification/information/documents:

• If the document is not legible, the proper officer may ask the applicant to upload legible copies
• If the address of the place of business does not match the uploaded document or if the uploaded document does not appear to be a valid proof of address, the proper officer may ask for additional documents to confirm the address details
• If the address of the place of business is incomplete, he may ask for complete and unambiguous details of the address along with corresponding documentary proof
• If any GSTIN linked to the applicant's PAN is found to be cancelled or suspended, he may ask for clarification on or reasons for the same from the applicant.

• The proper officer may reject the application if:
  • The reply to the aforesaid notice furnished by the applicant is not satisfactory
  • If the applicant fails to furnish a reply to the aforesaid notice within the prescribed period.

• If the applicant has failed to undergo or has not opted for Aadhaar authentication, the proper officer must initiate the process for physical verification of the place of business. The concerned officer must ensure that the physical verification report along with all the requisite documents (including photographs) is uploaded well in advance of the prescribed time limit.
• Even in cases where the applicant has undergone Aadhaar authentication, if the proper officer, based on the scrutiny of the registration application is of the opinion that physical verification of the place of business is essential, the same may be carried out in a time-bound manner.
• While processing the registration applications, including cases requiring physical verification, the proper officer must ensure that the application is either accepted, rejected, or relevant queries are raised within the specified time limit and no application is approved on a deemed basis for want of timely action on the part of tax officers.
• Even where the registration is granted on deemed approval basis or in other specified instances where physical verification of the place of business was not conducted, the CPC officer shall communicate the details of such cases to the concerned jurisdictional Commissionerate who shall then conduct physical verification within 15 days from the grant of such registration.
• Besides the above, physical verification of the place of business may also be conducted in other cases inter alia based on various risk parameters and risk ratings to verify the authenticity of such registrations. Where the registered person is found to be non-existent or fictitious, subsequent remedial actions should be taken without any delay.

 

[Instruction no:03/2023-GST dated 14 June 2023]

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