Draft Registration Rules:- Physical verification of business premises in certain cases” Is it in line with Ease for doing business”
Introduction:
First meeting of the GST Council was held in last week, the CBEC today came out with three draft rules and their formats relating to registration, invoice and payments which would be finalised very soon. In line of same, The Central Board of Excise and Customs (CBEC) has invited comments on draft rules latest by 28.09.2016 (within 2 days) from all stakeholders. The draft rules provide for online registration by residents within three days of submission of application. In the rules of registration there is provision for physical verification of business premises post registration in certain cases.
Rule 17 of Draft Registration Rules talks about Physical verification of business premises in certain cases.
Relevant Provision under Model GST Law:
As per section 19 (7) of the Model GST Act, granting or rejection of registration or UIN shall be carried out after due verification. Period and procedure for verification will be prescribed in the Rules. As per section 19 (9) of the Act, if no deficiency has been communicated to the applicant by tax authority within that period, a registration or UIN shall be deemed to have been granted.
As per the report of Business Process on GST Registration:
As per Para 6.12 of this business process report, The GST common portal will provide a risk profile to the tax authorities based on the risk parameters made available by the tax authorities. The Central/State tax authorities will also have their own risk profile based on their own risk parameters. It was noted that submission of Adhaar No. cannot be made compulsory. Non–submission of Adhaar No. could be one of the risk parameters for deciding about the post registration physical verification. On the basis of both risk profiles, the jurisdictional officer of tax authorities will take a decision about post registration verification of the application if so provided in the GST Law.
Relevant provision of Draft Rule for Registration is as under:
17. Physical verification of business premises in certain cases
Where the proper officer is satisfied that the physical verification of the place of business of a taxable person is required after grant of registration, he may get such verification done and upload the verification report along with other documents, including photographs, in Form GST REG-26 on the day following the date of such verification.
Contents of Physical verification Report: Form GST REG-26
1. Date of Visit
2. Time of Visit
3. Location details
Latitude
Longitude
North – Bounded By
South –Bounded By
West – Bounded By
East – Bounded By
4. Whether address is same as mentioned in application. Y / N
5. Particulars of the Persons available at the time of Visit
(i) Name
(ii) Father Name
(iii) Residential Address
(iv) Mobile Number
(v) Designation / Status
(vi) Relationship with taxpayer, if applicable.
6. Functioning status of the Business Functioning – Y / N
7. Details of the premises
Open Space Area (in sq. m.) – (approx.)
Covered Space Area (in sq. m.)-(approx.)
Floor on which business premises located
8. Documents verified: Yes/No
9. Upload photograph of the place with the person who is present at the place where site verification is conducted.
10. Comments (not more than < 1000 characters>)
Signature
Name of the Officer
Designation
Jurisdiction
The rules also provide for sue-moto registration of person who are liable but have failed to apply for registration. The rules also provide for physical verification of business premises after grant of registration under GSTN. Recently CBEC released FAQ, These FAQ is not talks about Physical verification of premises after post Registration.
GST regime proposes to move towards paperless administration where information Technology would play the major part in administration. Thus, physical verification of premises might not be intended to by the Government. However, the Department may reserve all right to make such inspection, especially in cases of new registrants.
Conclusion:
The Government always claims that in Goods and Services Tax regime, once implemented, will improve the ease of doing business in the country. One hand we are talking to working in a GSTN system i.e. paper less system, in which everything is on line and data will be updated on Real time basis. Return will be auto populated and other hand we are going towards old regime of excise/Vat registration in which physical verification of business premises is required. Under current Service Tax Registration process, requirement of physical verification of business premises is not required. When all KYC documents are available and Majority of assesse will be migrated from old regime to new GST regime, there is no need to give extra power to field formation officer to harass the assesse, in name of Physical verification of business premises after issuing the GSTIN. It will be fear that field formation officer will start Physical verification for existing migrated assesse also, henceforth it should be restricted in case of new assesse only. This provision seems to be harsh and need to re-look. When business process reports on Registration talks about, physical verification of premises will only for selected cases, based on their own risk profile/ own risk parameters of assesse, but in draft rules seems to be U turn from this situation.
Dr. Shailendra Saxena
B.COM, ACS, FCMA, FCA, DISA (ICAI), Ph.D
Chartered Accountant
Email:saxena20535@yahoo.com,Cell:09377410260
Author Bio
this is sad and to be avoided, Pm Modiji is a love of self attesttaion, so either the applicant should be allowed for self attestaion and in a digital India, one need not have physical place to do business/service. On top, they should allow online submission of documents (like EPf ESI MCA21- upload of address proof, id proof…), no need of physical submission of hard copies of the documents.