Board Issues
Guidelines for Verification of GST Registration to Catch Bogus Cases
·
To the extent possible, the
authenticity of the documents furnished as proof of address may be
cross-verified from the publicly available sources, such as websites of the
concerned authorities such as land registry, electricity distribution
companies, municipalities, and local bodies, etc.
·
Directorate General of
Analytics and Risk Management (DGARM), in coordination with GSTN, is conducting
risk rating of the applications for registration in form of High, Medium and
Low risk rating for each application for registration (ARN), based on data
analytics and risk parameters, and making the same available to the CGST field
formations in the form of Report Series 400 on DDM portal on regular basis.
·
Proper officer may also check
as to whether the registration(s) has been obtained on the same PAN earlier, either
within the same State or other State(s).
·
The proper officer requires
any clarification with regard to any information provided in the application or
documents furnished therewith or in respect of any other fact, he shall issue a
notice to the applicant electronically in FORM GST REG-03 within the
prescribed time limit.
·
FORM GST REG-03,
wherever required, is issued electronically within a period of seven working
days from the date of submission of the application in cases where the
applicant has undergone authentication of Aadhaar number and within a period of
thirty days in cases specified in proviso to sub-rule (1) of rule 9 of CGST
Rules, 2017.
·
The proper officer may get
such physical verification conducted in a time bound manner.
·
Get physical verification of
the place of business conducted through the jurisdictional officers of the
concerned Division/ Commissionerate.
·
No application for grant of
registration is approved on deemed basis for want of timely action on the part
of tax officers.
[Instruction No. 03/2023-GST dated 14 June, 2023]
Subject:
Guidelines for Processing of Applications for Registration.
Instances
have come to notice regarding unscrupulous elements obtaining fake/ bogus
registration under GST and defrauding the Government exchequer. Such fake/
non-genuine registrations are being used to fraudulently pass on input tax
credit to unscrupulous recipients by issuing invoices without any underlying
supply of goods or services or both. This menace of fake registrations and
issuance of bogus invoices for passing of fake ITC has become a serious
problem, wherein fraudulent people engage in dubious and complex transactions,
causing revenue loss to the government.
2.
Various modus operandi of obtaining such fake registrations have been detected
by Central and State Tax administrations. In some cases, identities of other
persons like PAN, Aadhaar, etc. have been misused without their knowledge to
obtain GST registration. Forged documents, such as forged electricity bills,
property tax receipts, rent agreements, etc. are also being used as proof of
principal place of business to obtain GST registration. In some cases, forged
identities have been created by using same photo of a person on different
Aadhaar cards under different names. In one of the cases detected recently, it
has been found that a few fraudsters have obtained fake GST registrations on
the basis of PAN and Aadhaar number of persons from economically weaker
sections by fraudulently modifying the phone number on the Aadhaar cards of
these persons by taking these persons to the Aadhaar Seva Kendra by giving a
nominal cash amount under guise of a government scheme and getting their
Aadhaar Cards linked to dummy mobile numbers by using their thumb impression.
3. To
address this problem of fake registration and fake input tax credit,
Instruction No. 01/2023-GST dated 04.05.2023 has been issued for concerted and
coordinated action on a mission mode by Central and State tax authorities in
the form of a Special All-India Drive against fake registrations.
4. In
this context, it is further felt that verification of applications for
registration by the proper officers is one of the most crucial steps in the
direction of preventing the menace of fake or bogus registrations. While
numerous initiatives have been/are being undertaken on the policy and systems
level, it is pertinent to strengthen the process of scrutiny and verification
of such applications for registration at the end of tax officers.
5.
Accordingly, the following guidelines are issued for strengthening the process
of verification of applications for registration at the end of tax officers in
a uniform manner:
5.2 FORM GST REG-01 prescribes a list of documents to
be uploaded by the applicant in respect of photograph, constitution of
business, principal place of business, bank account, etc. The proper
officer shall carefully scrutinize the said documents to ensure that the
documents are legible, complete and relevant. Further, the details or
information furnished by the applicant in the application should also be
carefully examined by the proper officer to check completeness of the same, to
correlate and cross-verify the same with the uploaded documents and to check
the authenticity of the applicant. The details of the address of principal and
additional places of business and the corresponding documents uploaded with the
application as proof of address may be closely scrutinised
to verify completeness and correctness of address of such places of business.
Further, to the extent possible, the authenticity of the documents furnished as
proof of address may be cross-verified from the publicly available sources,
such as websites of the concerned authorities such as land registry,
electricity distribution companies, municipalities, and local bodies, etc.
5.3 In order to facilitate targeted approach in verification
and processing of registration applications, the Directorate General of
Analytics and Risk Management (DGARM), in coordination with GSTN, is
conducting risk rating of the applications for registration in form of High,
Medium and Low risk rating for each application for registration (ARN), based
on data analytics and risk parameters, and making the same available to the
CGST field formations in the form of Report Series 400 on DDM portal on regular
basis. Accordingly, the proper officer shall check the said risk rating made
available by the DGARM in respect of the concerned ARN and take the same into
consideration while verifying and processing the said application. Special
attention needs to be paid to the cases where “High” risk rating has been
assigned to an ARN.
5.4
The proper officer may also check as to whether the registration(s) has been
obtained on the same PAN earlier, either within the same State or other
State(s). In such cases, the status of the said PAN as well as the compliance
record of the said GSTINs may also be checked from the portal. The proper
officer may also give due consideration and special attention to the cases
involving inter alia the following circumstances:
(i) where any
registration obtained on the PAN of the applicant has been cancelled
previously;
(ii)
where any registration obtained on the
PAN of the applicant is suspended at the time of verification of a new
application of registration;
(iii)
whether any application for
registration on the PAN of the applicant has been rejected previously;
(iv) whether the place of business of the applicant
appears to be risky based on local risk parameters;
(v)
whether the proof of address of place(s)
of business prima facie appear to be suspicious/ doubtful on the basis of
scrutiny of the application and the documents.
5.5
Where the application is found to be deficient, either in terms of any
information or any requisite document or where the proper officer requires any
clarification with regard to any information provided in the application or
documents furnished therewith or in respect of any other fact, he shall issue a
notice to the applicant electronically in FORM GST REG-03 within the
prescribed time limit.
5.6
Without prejudice to the facts of the case, the proper officer may seek
clarification or information or document(s) inter alia in the following cases:
(i) where any
document is incomplete or not legible, the proper officer may seek complete or
legible copy of the same.
(ii) where the address of place of business does
not match with the document uploaded by the applicant, or where such uploaded
document does not appear to be a valid proof of the address of the said place
of business, the proper officer may seek additional documents to confirm the
address details.
(iii) where the address of place of business is
incomplete or vague, the proper officer may seek complete and unambiguous
details of the address along with the corresponding documentary proof.
(iv) where any GSTIN linked to the PAN of the
applicant is found cancelled or suspended, the proper officer may seek
clarification or reasons for the same from the applicant, if required.
5.7
The proper officer shall carefully examine the clarification, information or
documents furnished by the applicant in FORM GST REG-04 in response to
the notice issued in FORM GST REG-03. Where the proper officer is
satisfied with the reply furnished by the applicant in FORM GST REG-04,
he may approve the grant of registration to the applicant within the prescribed
time period. However, where the proper officer is not satisfied with the
clarification, information or documents furnished, he may, for reasons to be
recorded in writing, reject such application and inform the applicant
electronically in FORM GST REG-05 within the prescribed time period.
Besides, where no reply is furnished by the applicant in response to the notice
issued under in FORM GST REG-03, within the prescribed time period, the
proper officer may, for reasons to be recorded in writing, reject such
application and inform the applicant electronically in FORM GST REG-05.
5.8
The proper officer must ensure that the said notice in FORM GST REG-03,
wherever required, is issued electronically within a period of seven working
days from the date of submission of the application in cases where the
applicant has undergone authentication of Aadhaar number and within a period of
thirty days in cases specified in proviso to sub-rule (1) of rule 9 of CGST
Rules, 2017.
5.9
Where the applicant has either failed to undergo authentication of Aadhaar
number or has not opted for authentication of Aadhaar number, the proper
officer shall immediately initiate the process for physical verification of the
place of business in accordance with provisions of rule 9 of CGST Rules read
with rule 25 thereof.
5.10
In this regard, the concerned officer must also ensure that the physical
verification report along with the other documents, including photographs, is
uploaded on the system in FORM GST REG-30 sufficiently in advance of the
prescribed time limit.
5.11
Further, even in cases where the applicant has undergone authentication of
Aadhaar number, if the proper officer, based on the scrutiny of the application
for registration and the uploaded documents, is of the opinion that physical
verification of the place of business is essential to check the authenticity of
the applicant, the proper officer may get such physical verification conducted
in a time bound manner. Till the time a functionality for marking an
application of registration for physical verification in Aadhaar authenticated
cases is made available on the portal/ ACES-GST application, the concerned
Centralized Processing Centre (CPC) officer may, where ever considered
essential, get physical verification of the place of business conducted through
the jurisdictional officers of the concerned Division/ Commissionerate. For
this purpose, till the time a functionality is available on the portal/
ACES-GST application, the concerned zones may devise a suitable mechanism at
the local level so as to ensure that physical verification is conducted in a
timely manner in respect of such essential cases and the concerned applications
for registration are disposed of within the time limit prescribed in rule 9 of
CGST Rules, 2017.
6
While processing the applications for registration, including in those cases
where physical verification is to be conducted, it will be ensured by the
proper officer that the application is either rejected or accepted or relevant
query is raised within the prescribed time limit and no application for grant
of registration is approved on deemed basis for want of timely action on the
part of tax officers. Strict view may be taken where any gross negligence is
observed on part of the concerned officer(s).
7.
Further, where ever the registration is granted on deemed approval basis or
where registration is granted by the proper officer in cases covered under the
parameters referred in para 5.4 as well in cases where “High” risk rating has
been assigned to an application for registration (ARN) in DGARM Report Series
400, and where physical verification of the place of business was not conducted
before grant of such registration, the CPC officer shall communicate the
details of such cases to the concerned jurisdictional Commissionerate
immediately after registration and physical verification of the place of
business shall be got conducted by the concerned Commissionerate within 15 days
of such registration, in the manner prescribed in rule 25 of CGST Rules, 2017.
Besides, the concerned Commissionerate may get such physical verification of
the place of business got conducted in other cases also, where ever required,
based inter alia on various risk parameters and risk ratings as per tools
available in ADVAIT/ BIFA or as per reports provided by DGARM, so as to verify
authenticity of such registrations. Wherever the registered person is found to
be non-existent or fictitious, subsequent remedial action(s) may be taken
without any delay.
8. The
Principal Chief Commissioner/ Chief Commissioner of the CGST Zones may closely
supervise the status of processing of the applications of registration,
including physical verifications, within their zones. Wherever it is noticed
that the application for registration has been granted deemed approval, the
reasons for the same may be got examined by the Principal Chief Commissioner/
Chief Commissioner for taking subsequent remedial action, if any, in a time
bound manner.
9.
Difficulties, if any, in implementation of these instructions may be informed
to the Board (gst-cbec@gov.in).
F. No.
CBIC- 20006/15/2023-GST