GST Council to tighten registration rules; physical verification to be mandatory in ‘high risk’ cases

PTI, Jul 7, 2023, 9:39 AM IST

In order to check fake registration, the GST Council is likely to reduce the time period to 30 days, from 45 days currently, for submission of PAN-linked bank account details of the person seeking registration with tax authorities.

The Council, in its meeting on July 11, is likely to provide for mandatory physical verification of the business premises of “high risk” applicants before granting of GST registration.

Also, the GST Rules are likely to be amended to state that person whose business premises is being verified should not be present at the spot during the physical verification.

The changes proposed by the Law Committee, comprising officers from Centre and states, with a view to contain fake registration under Goods and Services Tax (GST), would be considered by the Union finance minister-chaired GST Council.

The central and state GST officers are currently undertaking a special drive to catch fake registration. During the drive so far, 17,000 GSTINs were found to be non-existent. Of this, 11,015 GSTINs have been suspended and 4,972 have been cancelled, while Rs 15,000 crore tax evasion have been detected.

Sources said in light of several cases of unscrupulous elements obtaining fake/ bogus GST registration, it is desirable to strengthen the process of registration under GST by amending provisions of Central GST Rules, wherever required.

As per the existing GST Rules, a registered person is required to furnish details of PAN-linked bank account, which is in name of the registered person, within a period of 45 days from grant of registration or the date on which returns are due to be furnished, whichever is earlier.

The Law Committee suggested that the time period be reduced to 30 days from the date of outward supplies of goods or services in GSTR-1 or using invoice furnishing facility, whichever is earlier.

In case of a proprietorship concern, the Permanent Account Number (PAN) of the proprietor shall also be linked with the Aadhaar number of the proprietor.

In ‘high risk’ cases, the Law Committee suggested that the registration shall be granted within 30 days of application, after physical verification of the place of business.

The Committee was also of the opinion that the requirement of physical verification of business premises in the presence of the applicant poses “risk of manipulation by unscrupulous applicants making temporary arrangements in anticipation of the officer as well as risk of undue delays in case of wilful absence of the applicant”.

Accordingly, the Committee recommended to the Council that the requirement of the presence of the applicant for physical verification of business premises may be done away with, sources said.

A final decision on the recommendation of the Law Committee will be taken at the 50th GST Council meeting on Tuesday.