Physical verification is not a new concept in tax laws. Central Government has opened up new avenues for the Tax Officials for prior visit of premises whereby now the registering authority may undergo prior physical verification of the registered premises of the registrant prior to issuance of registration under GST Law.
(a) That GST is a combined law wherein a person is required to collect taxes for Central as well for State and thus registration is required to be applied for under Central as well as for State GST Law. Thus registration is required to be approved by Central as well as by State Authorities both simultaneously.
(b) That prior to implementation of GST Law under VAT Provisions as well as under Central Excise the registration was used to be granted by tax department after physical verification of the registering premises of the applicant for which physical verification report was required to be prepared and submitted by field office to the registering authority after being satisfied about the presence, existence of the registering dealer and for which the registering premises was used to be visited and its Map and other Landmark was used to be drawn by the visiting field authority so as to keep complete identification of person to whom the registration were being issued. In some of states this was prevalent looking to tax prone commodity. Usually time was allowed for 45 days for doing such physical verification and in case of urgency of getting registration the applicant was required to explain about nature of urgency for getting such physical verification done by department under earstwhile laws but after implementation of GST no such provision was there in the statute book in the initial stage of implementation of GST except Rule 25 and which was also in silent mode.
(c) That after implementation of GST all existing dealers were migrated to GST Law by filing of requisite form based on their existing registration and no physical verification were made at that time.
(d) That for getting new registration the applicant is required to submit all requisite documents online on GSTN Portal and after online verification by Central and State authorities the registration is issued within a period of 3-7 days in accordance with Rule 9. And in case of any information/ query is raised by registering authority the same is also required to be replied online and all requisite information/ details are to be submitted online and thereafter registration is issued in Form REG-06.
(e) Need of physical verification: That almost 33 months have been passed after implementation of GST there are several fraud cases have been bursted by Anti-Evasion, DGIGST wing of department across India of fake issuance of GST Invoices and fraudulently passing of Input tax credit. That during investigation in several cases the registered person could not be traced and if traced it has come out that he is not aware about any such registration which have ever been applied by him and despite of this huge voluminous turnover is being undertaken by any other person by falsly using the PAN and other credential document of that person. That to stop such mis use of documents of some other person wherein fake Input tax credit have been claimed and utilized these provisions have been brought on statute book. And thus cumulative effect of all these provision is that now while issuing the registration the One Time Pasword shall be sent on that mobile number which is given in Aadhar Card with UIDAI and thus wrong utilization of credential of any other person may be stopped.
II. PRESENT AMENDMENT
That Section 25 provides about the procedure for getting registration under GST Act. That Central Government vide Budget Amendment vide Finance Act 2019 has inserted Sub-Section (6A),(6B),(6C), (6D) to Section 25 of CGST Act which provides as below:-
“(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.”.
(a) That operative Rule for issuance of registration are provided in Rule 8 and Rule 9 of CGST Rules which stipulates about the documents and procedure for issuance of registration under GST Laws and which were heither been used for issuing registration.
(b) That CBIC to give effect to above amendments have come out with Notification no. 16/2020-Central Tax, 17/2020-Central Tax, 18/2020-Central Tax, 19/2020-Central Tax dt.23.3.2020. That notification no. 16/2020- Central Tax dt. 23.3.2020 is issued by which amendment in the Rule 8, Rule 9 and Rule 25 have been made which prescribes about procedure for doing Aadhar verification and/or for doing physical verification of principle place of business in the presence of person within a period of sixty days from the date of application.
(c) That by issuance of notification no. 17/2020-central tax dt.23.3.2020 notified from 1.4.2020 it has notified that provision of sub-section (6B),(6C) shall not be applied to a person who is not a citizen of India or to a class of person other than Individual, authorized signatory of all types, managing and authorized partner; and Karta of an HUF. Thus it is well clear that any foreign citizen person if make application for registration then compulsorily he shall be subject to physical verification. And thus Aadhar verification is allowed only to (a) Individual (b) authorized signatory of all types; (c) Managing and Authorized partner; and (d) Karta of an HUF.
(d) That vide Notification No. 18/2020-central tax it is provided that in case of not having Aadhar number, the applicant shall be subject to verification as per Rule 9 which states about physical verification of the registered premises in accordance with Rule 25.
(e) That vide Notification No. 19/2020-central tax dt.23.3.2020 notified from 1.4.2020 it is provided that (a) authorized signatory of all types; (b) Managing and authorized partners of a partnership firm; and (c ) Karta of an HUF shall be subject to verification of Aadhar number and in case of not having Aadhar the applicant shall be subject to verification in accordance with Rule 25.
Thus in short either Aadhar authentication is primary requirement or to have physical verification of the registered premises of the applicant before grant of registration and in short as a combine effect of all above amendments and notification is that now for new registration “AADHAR” shall be essential and in case of not having same the “PHYSICAL VERIFICATION” of registered premises shall be made in presence of applicant by registering authority in accordance with amended Rule 25 and of which physical verification report alongwith the other documents including photographs, shall be uploaded in Form GST REG-30 on the common portal with in a period of fifteen working days following the date of such verification.
CHALLENGES & CONCLUSION:
1. That as per Rule 9 of CGST Rules 3-7 working days are provided for getting issuance of registration and in this period in case of non providing the Aadhar it will be subject to delay in getting registration by applicant.
2. Registration of Casual Taxable Person: That in case of registration by Casual taxable person the physical verification become very difficult as in case of small proprietor holding an exhibition in other state shall be required to visit in other state for physical verification first and only then registration shall be issued and thus it will hamper in hold of exhibition etc.
3. That effect giving notification to sub-section (6A) of Section 25 of CGST have not been issued till date which speaks about Aadhar verification OR physical verification of existing registered dealer and also talks about failure to authenticate such verification all other provision shall be applied as if such person does not have a registration. Thus in first phase the new registration are being under scanner of Aadhar OR physical verification and perhaps in second phase the existing registration may also be verified by the Central Government.
4. That Central Government has come out with these amendment of CGST Act, CGST Rules and issuance of effect giving Notification so as to save those genuine buying person who used to purchase goods/services under bonafideness/good faith and to catch/ stop those fraudsters who used to involve in issuing fake input tax credit invoices.
Section 25, Rule-8, Rule-9, Rule-25
Compiled and written by :
SUNIL KUMAR GOGRA
B.COM., LLB, FCA
GOGRA & COMPANY
F-85, PANCHSHEEL MARG,
SUBHASH MARG, C-SCHEME,
JAIPUR – RAJASTHAN – 302001
E-MAIL : SKGOGRACA@YAHOO.COM