All about Aadhar Authentication under GST

Article explains Why Aadhaar e-KYC based GST Registration is required, Amendment to CGST Act, 2017 related to Aadhar Authentication, Exemption from Aadhar authentication, Date of coming into effect of Aadhar authentication under GST, Amendment to Rule 8 and 9 of CGST Rules, 2017 related to Aadhar authentication, Amendment of Rule 25 (Physical verification) of CGST Rules, 2017,  Authentication Process of Aadhar under GST Where Aadhaar is provided and  In cases where promoters decline to provide Aadhaar details.

Aadhar Authentication
Section 25(6) (A), (B), (C) & (D) of CGST Act, 2017
Rule 8 and 9 of CGST Rules, 2017; Rule 25 of CGST Rules, 2017
Notifications No. 17, 18 & 19 all dated 23rd March 2020
36th and 37th GST Council Meetings

I. Why Aadhaar e-KYC based GST Registration is required?

-To curb/check fly-by-night operators who are taking advantage of easy registration system. (3 working days and no field inspection)

-Statistics from e-way bill

-To stop impersonation

-To check bogus billing through ‘laptop shops’

II. Amendment to CGST Act, 2017 related to Aadhar Authentication

i. Section 25(6) was amended w.e.f 1st January 2020; Sub-sections 6A, 6B, 6C and 6D were inserted

(6A) Every registered person shall undergo authentication, or furnish proof of possession of Aadhaar number, in such form and manner and within such time as may be prescribed:

Provided that if an Aadhaar number is not assigned to the registered person, such person shall be offered alternate and viable means of identification in such manner as Government may, on the recommendations of the Council, prescribe:

Provided further that in case of failure to undergo authentication or furnish proof of possession of Aadhaar number or furnish alternate and viable means of identification, registration allotted to such person shall be deemed to be invalid and the other provisions of this Act shall apply as if such person does not have a registration

(6B) On and from the date of notification, every individual shall, in order to be eligible for grant of registration, undergo authentication, or furnish proof of possession of Aadhaar number, in such manner as the Government may, on the recommendations of the Council, specify in the said
notification:

Provided that if an Aadhaar number is not assigned to an individual, such individual shall be offered alternate and viable means of identification in such manner as the Government may, on the recommendations of the Council, specify in the said notification.

(6C) On and from the date of notification, every person, other than an individual, shall, in order to be eligible for grant of registration, undergo authentication, or furnish proof of possession of Aadhaar number of the Karta, Managing Director, whole time Director, such number of partners, Members of Managing Committee of Association, Board of Trustees, authorised representative, authorised signatory and such other class of persons, in such manner, as the Government may, on the recommendations of the Council, specify in the said notification:

Provided that where such person or class of persons have not been assigned the Aadhaar Number, such person or class of persons shall be offered alternate and viable means of identification in such manner as the Government may, on the recommendations of the Council, specify in the said notification.

(6D) The provisions of sub-section (6A) or sub-section (6B) or sub-section (6C) shall not apply to such person or class of persons or any State or Union territory or part thereof, as the Government may, on the recommendations of the Council, specify by notification.

Explanation.—For the purposes of this section, the expression “Aadhaar number” shall have the same meaning as assigned to it in clause (a) of section 2 of the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016.”.

III. Exemption from Aadhar authentication

Notification No. 17/2020 – Central Tax dated 23.03.2020

Aadhar authentication shall not apply to a person who is not a citizen of India or to a class of persons other than the following class of persons, namely:– (a) Individual; (b) authorised signatory of all types; (c) Managing and Authorised partner; and (d) Karta of an Hindu undivided family

IV. Date of coming into effect of Aadhar authentication under GST

Notification No. 18 & 19 /2020 – Central Tax dated 23.03.2020

i. Notifies the date as 01.04.2020 from which (a) an individual; (b) authorised signatory of all types; (c) Managing and Authorised partners of a partnership firm; and (d) Karta of an Hindu undivided family shall undergo authentication, of Aadhaar number, as specified in rule 8 of the CGST, 2017, in order to be eligible for registration.

ii. If Aadhaar number is not assigned to the said persons, they shall be offered alternate and viable means of identification in the manner specified in rule 9 of the CGST rules.

V. Amendment to Rule 8 and 9 of CGST Rules, 2017 related to Aadhar authentication

i. Sub-rule 4A inserted after Rule 8(4) –

“(4A) The applicant shall, while submitting an application under sub-rule (4), with effect from 01.04.2020, undergo authentication of Aadhaar number for grant of registration.”

ii. Following proviso inserted to Rule 9(1)-

Provided that where a person, other than those notified under section 25(6D), fails to undergo authentication of Aadhaar number as specified in rule 8(4A), then the registration shall be granted only after physical verification of the principle place of business in the presence of the said person, not later than sixty days from the date of application, in the manner provided under rule 25 and the provisions of sub-rule (5) shall not be applicable in such cases.”.

VI. Amendment of Rule 25 (Physical verification) of CGST Rules, 2017

i. Rule 25 of the CGST Rules, 2017 substituted as under:

“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 person is required due to failure of Aadhaar authentication before the grant of registration, or due to any other reason after the grant of registration, he may get such verification of the place of business, in the presence of the said person, done and the verification report along with the other documents, including photographs, shall be uploaded in FORM GST REG-30 on the common portal within a period of fifteen working days following the date of such verification.”

VII. Authentication Process of Aadhar under GST

i. Where Aadhaar is provided

• To maintain privacy of promoters, GST System shall send “link” to the concerned persons at their e-mail and mobile to enter Aadhaar and OTP, if the promoter is not willing to share Aadhaar with Auth Signatory.
• On successful authentication, demographic data of the persons shall be fetched from Aadhaar to GST System,
• Registration process, thereafter, will remain the same as it is today
• For existing registrant persons covered in Phase-1, a screen will be provided for e-KYC authentication from Aadhaar

ii. In cases where promoters decline to provide Aadhaar details:

• Site survey(Physical verification) will be done and identification documents will be verified. In such cases, 3 working days upper cap will not be applicable (No deemed registration).
• Proviso clause inserted in rule 9(1) of CGST Rules, 2017 providing for physical verification in such cases.

Source- CBIC