Physical verification for GST Registration

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Introduction

  • In a recent release of Central Board of Indirect Taxes and Customs (CBIC) notice asking the on ground offices to carry out a survey of physical verification of business entity that are granted GST registration between a specific timeline i.e. between August 21 and November 16 for make ensuring that they have genuine business entities.
  • The Central Board of Indirect Taxes and Customs (CBIC) has also asked taxmen for not to grant GST registration on temporary basis to the unqualified applicant whose Aadhaar authentication is not complete till date.
  • In this Article, we will study about the complete notice and guidelines issued by CBIC for taxpayers.

What is CBIC?

  • CBIC stands for Central Board of Indirect taxes and Customs which is a body of Department of Revenue under the Ministry of Finance, Government of India.
  • The basic function of this is to maintain a record of tasks for formulation of policy relating to levy and collections of Customs, Central Goods and Services Tax, Central Excise duties and Narcotics to some extent under the purview of CBIC.
  • The board is also considered to be the administrative authority for its subordinate organizations that includes Custom Houses, Central Excise and Central GST commission and Central Revenue Control laboratory.

Key Highlights of the Notification

  • In the latest notice, the Central Board of Indirect Taxes and Customs (CBIC) has told the Inspector of Taxes not to grant GST registration on temporary basis in those cases where the applicant has not chosen Aadhaar Authentication or it is failed or pending.
  • In present scenario in GST law and provision permits for temporary/deemed registration on the completion of 21 days of application if the authorized officer has not issued any notice within the above mentioned period of days.
  • This step is taken upon the data received of one year that during the month of August and November that many deemed registrations are granted where verification is not properly done in terms of Aadhaar Authentication.
  • These so called registrations were permitted on temporary/deemed basis requirement to ensure that the applicant have genuine business or with bona fide intention while issuing Standard Operating Procedure (SOP) for undertaking physical form of verification of persons who have been granted temporary/ deemed registration.
  • In physical verification, the officer will keep a check that in case person intends to carry out manufacturing activity and investing in capital goods that is require for the above mentioned category shall be installed and taken care of.
  •  The officer should also check electricity bills and connections in terms of the payment made on time or not.
  • Also, if it matches with the activity and business carried out by the applicant and the place of business is self owned or is rented and documents relating to ownership or registered lease of the property.
  •  Another phase of verification would also include obtaining details of number of employees those who have already working with record of their employment, PAN, Aadhaar Card of the applicant and its proprietor, partners, directors as in case and other authorised signatories.
  • According to Standard Operating Procedure (SOP), bank letter for up to date KYC shall also be checked. Also, the allotment of capital employed or proposed to be employed has to be supervised.
  • Additionally, the authorized officer in the interest of revenue should carry out the preliminary stage of financial verification of the applicants by asking for the documents and monitoring closely.
  • The essential documents shall include Income Tax Returns of the Company or Limited Liability Partnership form the date of incorporation or for past three financial years whichever is necessary. In other cases Income Tax Returns of the proprietor, partners shall be taken for verification process.
  • Undertaking from the applicant shall be taken of the status of activity mentioning date of registration of all the linked accounts and phone number linked to the bank accounts shall be obtained.
  • From now, there shall be no circumstances where the registration is permitted on the deemed or temporary basis if applicant has not opted for Aadhaar authentication or it is failed.

Conclusion

  • Under rule 9 of Central Goods and Services Tax as on August, 2020 provides that where Aadhaar Authentication is not chosen or it is failed, the authorized officer is obligated to conduct and initiate physical verification of the place of business.
  • In other case where physical verification is difficult, certain additional documents shall be asked to produce by the authorized officer that shall officer not below of the rank of Joint Commissioner for verification before granting the deemed/temporary registration.

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