Deemed GST registration granted between August 21 and November 16 under CBIC scanner

The Central Board of Indirect Taxes & Customs (CBIC) has instructed its officials to verify deemed Goods and Services Tax (GST) registrations granted to business entities without Aadhaar authentication between August 21 and November 16 this year to ascertain that they are undertaking genuine business activities, two officials said.

It has been noticed that many unscrupulous people are misusing the easy GST registration system to con the exchequer by generating fake invoices and misappropriating input tax credit (ITC), the officials said, requesting anonymity. Currently, the GST law permits deemed registration after 21 days of application.

The CBIC, which is under the administrative control of the Department of Revenue, an arm of the Union finance ministry, has also come out with standard operating procedure (SOP) for officers to carry out physical verification of entities that have been granted a deemed GST registration without Aadhaar authentication, the officials said.

“This SOP would effectively curb the fake invoices menace and ITC frauds while at the same time, this would ensure proper facilitation of ease of doing business for the genuine applicants/entities without any overreach,” one of the officials said.

These decisions have been taken recently at a high-level review meeting of the department of revenue, he added.

Meanwhile, the government has also intensified its nationwide crackdown against fake GST invoices. The Directorate General of GST Intelligence (DGGI) has so far arrested 92 persons for availing or passing on ineligible ITC fraudulently through fake invoices and have booked 994 cases against more than 3,161 fake GST registered, a second official said.

An entity having deemed registration where the applicant has not opted for Aadhaar authentication has to go for mandatory physical verification of the premises, he said. “In cases where the physical verification is difficult, certain additional documents may be called for verification by the tax officer before deciding upon grant of registration,” he added.

“All such deemed registrations would be subjected to compulsory post registration verification and the list of such deemed registrations would be circulated zone wise to the field formations for confirmation which has to be completed in a time bound manner within three weeks and a weekly status report has to be submitted to the CBIC,” he said.