“Explore the basic requirements for a registered office under the CGST Act 2017. Learn the consequences if a business is not operated at the registered office. Discover how to identify and prevent ‘fake GST registrations’ to curb revenue loss and unfair competition.”
Basic Requirements under CGST ACT 2017 for Registered Office
Under the CGST Act 2017, there are certain basic requirements that a registered office or address must fulfill. These requirements are as follows:
1. The registered office or address must be a place where the taxpayer carries out his business activities.
2. The address must be a physical location that can be easily identified and located by the tax authorities.
3. The registered office or address must be a permanent location, which means it cannot be a temporary or seasonal location.
4. The taxpayer must provide proof of ownership or lease of the premises, such as a rent agreement, sale deed, or lease agreement.
5. The taxpayer must ensure that the registered office or address is accessible to the public during business hours.
6. The taxpayer must display the GST registration certificate prominently at the registered office or address.
7. The taxpayer must update the registered office or address in the GST registration certificate within 15 days of any change.
Failure to comply with these basic requirements may lead to penalties and other legal consequences under the CGST Act 2017. Therefore, it is important for taxpayers to ensure that their registered office or address meets these requirements at all times.
Under the CGST Act 2017, a registered person is required to carry out their business activities from their registered office or address. If a business is not operated at the registered office or address, it may have the following consequences:
1. Penalty: If a registered person fails to operate their business activities from their registered office or address, they may be liable to pay a penalty under the CGST Act 2017. The penalty may range from a minimum of Rs. 10,000 to a maximum of Rs. 25,000.
2. Suspension or cancellation of registration: The GST authorities may also suspend or cancel the registration of a registered person if they find that the business is not being operated from the registered office or address. This may lead to additional penalties and legal consequences.
3. Loss of Input Tax Credit (ITC): If a registered person is not carrying out their business activities from the registered office or address, they may not be eligible to claim input tax credit on the goods or services used for such activities. This may lead to a loss of ITC and increase the cost of doing business.
Therefore, it is important for registered persons to comply with the requirement of carrying out business activities from their registered office or address to avoid penalties and legal consequences under the CGST Act 2017.
Fake registration under the GST Act 2017 refers to the act of obtaining a GST registration by providing false or misleading information. This could include providing false business details, fake invoices, and bogus addresses to obtain GST registration and take advantage of the GST system.
Some common examples of fake registrations include:
1. Phantom/fictitious firms – where fake companies are created on paper to generate fake invoices and claim fraudulent GST refunds.
2. Non-existent businesses – where a GST registration is obtained in the name of a non-existent business, which does not carry out any business activities.
3. Circular trading – where a group of companies create a loop of fake invoices to fraudulently claim input tax credit (ITC) on goods that have not been actually supplied.
4. Identity theft – where the identity of a genuine business is stolen to create a fake GST registration and commit fraud.
Fake registrations can have several negative impacts, such as:
1. Revenue loss – as fake registrations may result in bogus claims for GST refunds or ITC, leading to revenue loss for the government.
2. Unfair competition – as fake registrations allow businesses to evade taxes and claim fake credits, they can create unfair competition for genuine businesses.
3. Reputation damage – fake registrations can harm the reputation of the GST system and genuine taxpayers.
To prevent fake registrations, the GST authorities have implemented several measures such as verification of PAN and Aadhaar details, e-verification of bank accounts, and physical verification of premises. The authorities have also established an Anti-Profiteering Authority to investigate and penalize businesses that indulge in unfair practices under the GST Act 2017.