“Get insights into the CGST and SGST Special Drive against Fake GST Registrations. Understand the legal backing, who will be visited, and the inspection process. Stay compliant to avoid penalties!”
We have been seeing many forwards as to what is Special Drive, what all you have to keep ready, consequences so far and so forth. To begin with in this article we will be trying to discuss the following
1. What is this Special Drive? Is it backed by any legal document? and Why this have been initiated ?
2. Is it so that Central and the State officers will visit each and every person who is registered? If no than for whom will they visit?
3. Things / the procedure the officers will follow while doing this inspection ? Can they count stock, verify returns, verify the purchases?
4. Whether any penalty for non-consequences be imposed, if the registered person has not followed the check points and whether is there any remedy after the officer imposes the consequences ?
To start with the 1st question i.e. What is this Special Drive? Is it backed by any legal document? and Why this have been initiated?
The increase in the misusing of the identity proofs and obtaining the fake / bogus / no-genuine registrations under the GST for the reason of bill trading and passing on the irregular input tax credit has lead to a huge revenue loss to the government. To overcome the intention of the registered person to defraud the Government Exchequer, the Central and the State Governments have launched this Special All-India Drive against the Fake Registrations by instructing the officers vide Instruction No. 01/2023 – GST dated 04.05.2023 to detect such remedial action to prevent any further revenue loss to the government.
This drive would be conducted during the period 16.05.2023 to 15.07.2023
With respect to the 2nd question i.e. Is it so that the Central and the State officers will visit each and every person who is registered? If no than for whom will they visit?
The Central officers and the State officers will not be visiting to the business premises of each and every registered person. The officers will be visiting to only those registered persons whose name is appearing in the list provided by the department which would be generated with the help of artificial intelligence. The chances of the visit by the officer increases
1. Where the registration was deemed approved by the department or where the physically verification of the premises are not been done by the officers.
2. Where the registration was deemed approved by the department after filing of the reply to the SCN of the registration.
3. Where the registered person has not paid any cash from the inception of the GST.
4. Where the registered person have substantial mismatch between the GSTR-1 & GSTR-3B
5. Where the E-way Bills are not systematically generated or where the registered person was liable to generate E-Invoicing but have not generated the E-Invoicing.
6. Where the registered person is having more than one GSTN within the state.
7. Where more than 1 premises are located or where for more than one GSTN same address have been entered at the time of registration
Further do remember only the jurisdictional officer shall be having the power to visit the premises i.e. if your registered under the State than only State Officer of the said range or circle would be visiting the premises
With respect to the 3rd question as to the documents to keep ready and the the procedure the officers will follow while doing this inspection ? Can they count stock, verify returns, verify the purchases ?
During the visit under this special drive the officer can only inspect the documents which are required at the time of obtaining the registration i.e.
1. the Aadhar Card of the registered person
2. the Pan Card of the registered person
3. the GST registration certificate.
4. the rental agreement for the principal place of business & the additional place of the registered person
5. the goods / the services the registered person is dealing / providing with.
Do remember its always better to have a board displaying the GSTN Number and the Trade Name of the firm.
Further with respect to the doubts as to whether the officer can verify the books of accounts and or the discrepancies with respect to the returns
The answer is no, in this visit the officer will only verify the genuineness of the registered person. If they get a doubt, then the officer can issue a notice for audit or the notice in form ASMT 10 for scrutiny of returns. Further if you get a doubt as to whether the officer is a department officer or not you are always free to request him to show his identity card to avoid fake visits.
Remember do co-operate with the officers as they would be taking the photos of the business premises as the officer in most of the cases are mandated to upload the said photos
The last comes the consequences / the penalties for non-consequences.
Do remember this drive is a purpose driven, the officer if not satisfied with the genuinely of the documents then he may after giving a notice to the registered person block the credit available in the electronic credit ledger and can even suspend the registration. The officer shall provide you with the opportunity of being heard before cancelling the registration.
Thereby to conclude, the drive is for the betterment of the taxpayers and will help in bring the transparency and removing the revenue leakages from the business. Though this drive may cause a bit harassment to the registered persons. But remember its not that strict as the people are afraid off. If you have the documents handy then it will not cause you any hardships.
The author can be reached @ ajay@mundadaandco.com
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