Introduction: The issue of fake GST registration has become a major concern for the Indian government, leading to significant revenue losses. To combat this problem, the GST Council has recently conducted a meeting where it was decided to launch a special drive to identify and address fake GST registrations. The Central Board of Indirect Taxes and Customs (CBIC) has issued instructions for this drive, which will take place from May 16th to July 15th, 2023, across India. It is important to note that this drive aims to verify registrations rather than conduct inspections, ensuring that genuine GSTN holders need not panic. The objective is to identify those involved in passing Input Tax Credit (ITC) without engaging in regular business activities, thereby causing financial losses to the government.
Key Points for Taxpayers during the Special Drive:
Display GSTN at Business Premises: Taxpayers need to prominently display their GSTN at the premises from which they operate their business.
Review Rent Agreements: Taxpayers should renew their rent agreements if they have expired and review all the supporting documents submitted during the GST registration process.
Gather KYC Information: Taxpayers in partnerships or other entities need to gather KYC information of their partners or directors.
Collect Ownership Proof: Taxpayers should collect a No Objection Certificate (NOC) or ownership proof of the business premises if there are any changes or renewal in the agreement. Additionally, they should review supporting documents like electricity bills related to the premises.
Display Trading Name: Taxpayers must ensure that they display their exact trading name as mentioned in their GST registration certificate along with their GSTN.
Review Supplier Details: Taxpayers need to review the details of their suppliers, including the purchase of goods and invoice-wise payment track. It is crucial to verify that they are purchasing from genuine suppliers.
Maintain Proper Books of Account: Taxpayers must maintain all the books of account as prescribed by the GST Act and ensure compliance by keeping track of inward supplies (purchases), outward supplies (sales), and other relevant details.
Review GST Compliances: Taxpayers need to review the compliance status of their suppliers for goods and services and ensure timely filing of GSTR-1, GSTR-3B, and other required returns.
Cooperate with Verification Process: If GST officers visit their business premises for verification, taxpayers should make all necessary documents available to avoid unnecessary notices for non-compliance.
Consequences of Non-compliance:
Failure to comply with the verification process may result in the following consequences:
Penalties: Taxpayers may be subject to penalties as per the CGST and SGST Act.
GST Registration Cancellation: The procedure to cancel the GST registration may be initiated.
Input Tax Blockage: Input tax may be blocked, preventing taxpayers from utilizing it.
Recovery of Input Tax Credit: If taxpayers have availed input tax credit based on fake GST invoices, the recovery of falsely claimed credits may be enforced.
Conclusion: The launch of this special drive against fake GST registrations demonstrates the government's commitment to combating fraudulent practices and protecting the integrity of the GST system. It is crucial for taxpayers to be aware of the necessary steps they need to take during this verification process. By displaying their GSTN, renewing rent agreements, reviewing supporting documents, gathering KYC information, and ensuring compliance with GST regulations, taxpayers can establish their authenticity and cooperation. Additionally, maintaining accurate records, reviewing supplier details, and timely filing of returns are essential measures. Non-compliance can result in penalties, cancellation of GST registration, input tax blockage.