“Learn how to navigate the Special Drive against fake GST registration from May 16 to July 15, 2023. Discover actions tax authorities may take, including suspension and cancellation of GST registration, blocking input tax credit, and more. Gain insights on precautions to safeguard your business, such as displaying GST registration certificates, maintaining proper documentation, and conducting due diligence before engaging in transactions. Stay informed and compliant with these guidelines.”
Let’s first understand, what this drive is all about & why is this being started? In the National Co-ordination meeting held on 24th April 2023, various issues in relation to bogus GST registration, fake GST ITC availment & passing, use of forged documents for GST registration etc. were addressed. It was decided in the meeting that to contain these issues, there is a need of coordinated action by tax authorities, and thus the drive was proposed.
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What will be the period of the drive?
It may be launched from 16th May 2023 to 15th July 2023
What action will be taken against the defaulters?
- If it is found that the business is non-existent and fictitious, then the tax officer may immediately initiate action for suspension and cancellation of GST registration.
- Input tax credit in electronic credit ledger may be blocked.
- Suitable action may be initiated for demand & recovery of ITC availed from a supply made through a bogus GST registered person.
What precautions should be taken to deal with this?
Display of GST registration certificate
Rule 18(1) requires every registered person to display GST registration certificate in a prominent location at principal place of business & at every additional place of business.
Display of name board
Rule 18(2) requires every registered to display name board displaying their trade name, GSTIN and address.
Name board is also required to be displayed at principal place of business & at every additional place of business.
Maintain documents of address proof
You must have the document evidencing the address used as principal place of business or additional place of business.
Keep documents such as Rent agreement, ownership proof, NOC depending on whether the property is rented or owned.
Ensure all the places from where you conduct the business is added to your GST registration certificate
Maintenance of sale & purchase record & regular filing of GST returns
GST Act requires the maintenance of sales & purchase documents at the registered place of business. Keep your GST return filing proper & in time.
Perform due diligence in case of suspicion before dealing with a new business
Since, Input tax credit availed from a supplier which is a bogus GST registered person will be recovered by the GST authorities, it is important that we do a due diligence of the supplier with respect to its existence & genuineness, especially if you are engaging in a high value transaction.
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Disclaimer: The above post is only for the purpose of academic discussion and should not be construed as any legal opinion in any matter whatsoever.
The author is a CA in practice at Delhi and can be contacted at: E-mail: abhinandansethia90@gmail.com, Mobile: +91-9811741451
Author Bio
As per Requirement for GST registration verification team.GST number is to be displayed on the sign board alongside of the registered oragnisation name and address. It is well known that the GST number contains the PAN number which is often used as Pass word to open various Income Tax related documents and others. How does the government expect the trader to advertise through the sign board the firms PAN number ,which is a confidential information of the holder of the PAN and should be shared only with the authorised person or authority and not to the general public . Showing the GST IN number to the inspecting team is OK but insisting it to be displayed on a sign board is a finacial threat to the trader and any one can misuse the PAN number. Thus the provision of the display of the GST number should not be insisted.