Central Board Indirect Taxes & Customs vide notification dated 14th June, 2023 has issued Guidelines for processing of applications for GST related registrations. Instances of fraudulent individuals obtaining fake or bogus GST registrations have emerged, leading to substantial revenue losses for the government. These registrations are utilized to illicitly pass on input tax credit to unscrupulous recipients through the issuance of invoices without actual supplies.
To address this problem, the Central and State tax authorities have initiated a Special All-India Drive against fake registrations. One crucial aspect of preventing such fraudulent activities is strengthening the verification process for registration applications by tax officers as per the following procedure.
- Scrutinizing Application Details and Uploaded Documents: Upon receiving an application for registration in the ACES-GST application, the concerned tax officer must initiate the process of scrutiny and verification. The officer should carefully examine the details provided by the applicant in FORM GST REG-01 and the accompanying uploaded documents. The officer’s goal is to ensure that the documents are legible, complete, and relevant. Additionally, they should cross-verify the information furnished by the applicant and authenticate its authenticity. The address details and supporting documents should be closely scrutinized for completeness and accuracy, with efforts made to verify them through publicly available sources.
- Risk Rating Analysis: The Directorate General of Analytics and Risk Management (DGARM), in collaboration with GSTN, conducts risk rating analysis of registration applications based on data analytics and risk parameters. The applications are categorized as High, Medium, or Low risk. The tax officers must consider the risk rating assigned by DGARM while processing the applications. Particular attention should be given to applications with a “High” risk rating.
- Checking Previous Registrations: Tax officers should investigate whether the applicant has previously obtained registrations using the same PAN, either within the same state or in other states. They should also review the compliance record of those GSTINs. Special attention is warranted for cases involving canceled, suspended, or rejected registrations on the applicant’s PAN. Additionally, if the place of business appears risky based on local risk parameters or if the proof of address seems suspicious, these cases should be treated with priority.
- Seeking Clarification and Additional Information: In instances where the application is found deficient or clarification is required, the proper officer must issue an electronic notice in FORM GST REG-03 within the stipulated time. The officer may request additional documents or seek clarifications for incomplete, illegible, or mismatched information. Incomplete or vague addresses should be addressed, and proof of address details should be provided in a clear and unambiguous manner. If any linked GSTIN on the applicant’s PAN is canceled or suspended, the applicant should provide an explanation if requested.
- Reviewing and Approval or Rejection: Upon receiving the clarification, information, or documents from the applicant in response to the notice, the proper officer should carefully examine them. If satisfied, the officer can approve the grant of registration within the prescribed time limit. However, if the officer remains unsatisfied, they may reject the application and notify the applicant electronically in FORM GST REG-05. Failure to respond to the notice within the prescribed time will also lead to rejection. Timely action is crucial, and no application should be approved on a deemed basis due to officer inaction.
- Physical Verification and Post-Registration Actions: Physical verification of the place of business should be initiated promptly in cases where Aadhaar authentication is not completed or opted for. A physical verification report, along with other necessary documents and photographs, should be uploaded on the system in FORM GST REG-30 within the prescribed time limit. Furthermore, cases that were granted registration on a deemed approval basis or with a “High” risk rating should undergo physical verification by the jurisdictional Commissionerate.
