The Government of India has been taking several initiatives to promote ‘Ease of Doing Business’. Online GST registration with Aadhaar authentication is one such important reform aimed at reducing human intervention, minimizing harassment, and speeding up the process of granting GST registrations. However, certain instances show that despite these measures, some officers misuse their powers, leading to unnecessary litigation and harassment of genuine taxpayers.
Aadhaar Authentication and Physical Verification
According to Rule 8 and Rule 9 of the CGST Rules, 2017, if an applicant undergoes Aadhaar authentication successfully, then physical verification of the place of business is not required, except in certain cases where the proper officer deems it necessary with recorded reasons. This was further clarified in CBIC guidelines issued through Notification 62/2020-Central Tax dated 20/08/2020
There is a case where I personally know, the applicant successfully completed Aadhaar authentication. Despite this, the officer visited the premises, and later, after registration was granted, the officer issued a Show Cause Notice alleging that there was no business activity at the premises. The applicant duly replied with GPS location photographs, business name board, and proprietor’s photo as evidence.
Filing of Returns
The applicant had filed GSTR-1 and GSTR-3B for July 2025 showing valid purchases, thereby evidencing the genuineness of business activity. Despite these compliances, the officer passed an order cancelling the GST registration without properly considering the reply and documents submitted.
Nature of Business and Officer’s Expectation
The applicant was engaged in the construction business. The sector itself requires large purchases and services even before visible activity at the site begins. Therefore, merely because the officer did not witness ongoing construction at the site cannot be a valid ground for concluding that no business was carried on.
Relevant Legal Provisions
Some important provisions under GST law which safeguard taxpayers are:
- Section 29(2) of the CGST Act, 2017: The proper officer may cancel the registration of a person from such date, including any retrospective date, as he may deem fit, where the circumstances exist as specified. However, such cancellation must follow due process and principles of natural justice.
- Section 75(4) of the CGST Act, 2017: An opportunity of hearing shall be granted where a request is received in writing from the person chargeable with tax or penalty, or where any adverse decision is contemplated against such person.
- Rule 25 of the CGST Rules, 2017: Where the proper officer is satisfied that physical verification of the place of business is required for grant of registration, he may get such verification done and the verification report along with photographs shall be uploaded in FORM GST REG-30.
Judicial View
Courts have repeatedly held that irresponsible actions of officers lead to avoidable litigations. In ‘M/s. Suguna Cutpiece Center vs. Appellate Deputy Commissioner (ST) (GST)’ [Madras High Court, 2022], the Hon’ble Court set aside the cancellation of GST registration on the ground that the taxpayer was not given a proper opportunity of hearing.
Similarly, in ‘Tvl. Suguna Cutpiece Center’ and other cases, courts have emphasized that cancellation of GST registration affects the fundamental right to carry on business under Article 19(1)(g) of the Constitution of India, and therefore such powers must be exercised cautiously.
Conclusion
This case is a clear example of how the irresponsible activities of officers are contrary to the Government’s stated policy of promoting Ease of Doing Business. Despite Aadhaar authentication, filing of returns, and submission of documentary proof, the officer arbitrarily cancelled the registration. Such actions force genuine taxpayers to run from pillar to post, file grievances on CPGRAM, and even approach courts for relief. This not only increases litigation but also burdens the judiciary unnecessarily.
The GST Council and CBIC must take strict measures to ensure accountability of officers so that genuine taxpayers are not harassed, and the spirit of Ease of Doing Business is upheld in its true sense.
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