April 1, 2019

Verification procedure before granting new GST Registration

Recently Central Board of Indirect Taxes and customs (“CBIC” or “Department”) via circular no. 95/14/2019-GST dated 28th March, 2019 has issued verification procedure before granting new GST registration where Verification procedure for GST Registration is discussed in detail.

Such Verification procedure for GST Registration can be taken in the following cases.

Where the tax payer is seeking another registration within the State although he has an existing registration within the said State
Where earlier GST registration has been cancelled by department.

1. Verification procedure for GST Registration

While granting GST registration, proper officer is required to exercise due care in following lines:

Proper officer should compare information given in new registration with particulars of earlier registration to ensure accuracy.
Grounds on which earlier registration was cancelled and status of statutory violation on the basis of which registration was cancelled should be checked.
Information about earlier registration may be fetched from common GST portal based on PAN mentioned in new application form. Status of earlier registrations (cancelled/suspended/active) is available on common portal.
There can be cases where person may constitute a different business entity to obtain new GST registration like a proprietor may form a partnership firm or a company. Accordingly, proper officer should ensure that whether any GST registration has been obtained on PAN of proprietor, all partners/karta/managing directors and whole time director/members of managing committee of associations/ board of trustee etc. PAN is all such persons is given by applicant in application form.

2. Why verification procedure has been prescribed where earlier registration has been cancelled

Recently, department has cancelled various GST registrations on account of non-compliance of the statutory provisions given under GST law.

However, in consequences, person who are carrying business and required to have GST registration are not applying for revocation of cancellation of such GST registration u/s 30 of Central Goods and Service Tax Act, 2017 (“CGST Act”). Whereas, such persons are applying for fresh registrations.

Further, there are many below instances noticed by department

wherein such persons have not filed required GST returns
and also not paid taxes for such cancelled/old registration.

If such person applies for revocation of such cancelled registration then he would be required to pay all due taxes alongwith interest and penalty and he would be required to file all applicable return. Therefore, persons are finding it as a loop to avoid payment of GST.

Department has highlighted that there are possibilities that person (whose old registration is cancelled and he not paid due taxes of earlier registrations) may furnish incorrect information while applying fresh registration such as he may mention incorrect date of commencement of business, incorrect date from which liability to pay GST arises etc.

Such person may also suppress details about old cancelled registration.

3. Cases where application for GST registration will be rejected

Proper officers are instructed that application for fresh registration should be rejected of the following persons:

Where applicant has opted composition scheme for his old registration and he has not filed GST return for such registration for three consecutive tax period.
Where person (other than person who has opted for composition scheme) has not filed GST return for continous six months for his earlier GST registration.
Non applying for revocation of cancellation of GST registration while continuation of default like non filling of GST returns, non deposit of tax liabilities,

However, proper officer may grant registration if applicant submits sufficient convincing justification or clarification, information and document to substantiate such default.

DISCLAIMER: The views expressed are strictly of the author and VJM & Associates LLP. The contents of this article are solely for informational purpose. It does not constitute professional advice or recommendation of firm. Neither the author nor firm and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any information in this article nor for any actions taken in reliance thereon.

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