GST Registration- Latest Changes and Issues involved with case laws
The Goods and Services Tax framework has undergone significant transformations since its implementation in 2017. Recent amendments and judicial pronouncements have further shaped the dynamics of GST registration.
Latest Changes in GST registration process
1) Aadhaar Authentication for registered persons: Rule 10B of CGST Rules had been inserted by Noti. No. 38/2021-Central Tax dated 21.12.2021. Aadhaar authentication of applicants has become mandatory. Non-compliance may lead to delays or rejection of applications.
Biometric-Based Aadhaar Authentication and Document Verification
Rule 8 of the CGST Rules, 2017 has been amended to provide that an applicant can be identified on the common portal, based on data analysis and risk parameters for Biometric-based Aadhaar Authentication and taking a photograph of the applicant along with the verification of the original copy of the documents uploaded with the application.
GSTN has issued various advisories in this regard for different States.
Recently, an advisory has been issued for GST Registration Applicants of Chhattisgarh, Goa and Mizoram dated 15th December 2024
After the submission of the application in Form GST REG-01, the applicant will receive either of the following links in the e-mail,
(a) A Link for OTP-based Aadhaar Authentication OR
(b) A link for booking an appointment with a message to visit a GST Suvidha Kendra (GSK) along with the details of the GSK and jurisdiction, for Biometric-based Aadhaar Authentication and document verification (the intimation e-mail)
If the applicant receives the link for OTP-based Aadhaar Authentication as mentioned in point (a), she/he can proceed with the application as per the existing process.
However, if the applicant receives the link as mentioned in point (b), she/he will be required to book the appointment to visit the designated GSK, using the link provided in the e-mail.
The feature of booking an appointment to visit a designated GSK is now available for the applicants of Chhattisgarh, Goa and Mizoram.
After booking the appointment, the applicant gets the confirmation of appointment through e-mail (the appointment confirmation e-mail), she/he will be able to visit the designated GSK as per the chosen schedule.
The biometric authentication and document verification will be done at the GSK, for all the required individuals as per the GST application Form REG-01
2) All-India Drive against fake Registrations- For verification and detection of suspicious/ fake Registrations and for taking timely remedial action to prevent any further revenue loss to the Government.
Instruction No.02/2024-GST Dated: 12th August 2024 issued as Guidelines for Second special All-India Drive against fake Registrations.
3) Automatic Suspension for Non-Compliance- Rule 21A of the CGST Rules allows automatic suspension of GST registration if:
4) Enhanced time limit to apply for Revocation of cancelled Registration-
As per Rule 23 of CGST Rules, a Registered person, whose registration is cancelled by the Proper officer on his own motion, may, subject to the provisions of Rule 10B, submit an application for revocation of cancellation of registration, in FORM GST REG-21, to such Proper officer, within a period of ninety days from the date of the service of the order of cancellation of registration, at the common portal, either directly or through a Facilitation Centre notified by the Commissioner.
The above stated time limit of 90 days is substituted by CGST (Second Amendment) Rules, 2023 dated 04.08.2023 w.e.f. 01.10.2023 for "within a period of thirty days from the date of the service of the order of cancellation of registration.
5) Threshold Exemption for Registration- The threshold for GST registration has been revised to ?40 lakhs for businesses dealing in goods.
As per notification no. 10/2019 (central tax) dated 07.03.2019, if a person exclusively engaged in the supply of goods and whose turnover does not exceed Rs.40 lakhs in a financial year is not required to get registered under GST. The benefit of this notification is only for persons exclusively dealing in the supply of goods.
6) Eligibility of claiming ITC where registered person whose registration was cancelled— In order to decide the eligibility to claim ITC, reference is invited to sub-section (6) of Section 16 of the CGST Act inserted in Section 16 of the CGST Act, with effect from the 1st day of July, 2017, vide section 118 of the Finance (No. 2) Act, 2024, whereby the time limit to avail input tax credit under provisions of sub-section (4) of Section 16 of CGST Act has been retrospectively extended in certain specified cases.
Sub-section (6) of Section 16 of the CGST Act is reproduced below for ready reference:
"(6) Where registration of a registered person is cancelled under section 29 and subsequently the Cancellation of registration is revoked by any order, either under section 30 or pursuant to any order made by the Appellate Authority or the Appellate Tribunal or court and where availment of input tax credit in respect of an invoice or debit note was not restricted under sub-section (4) on the date of order of cancellation of registration, the said person shall be entitled to take the input tax credit in respect of such invoice or debit note for supply of goods or services or both, in a return under section 39,––
(i) filed upto thirtieth day of November following the financial year to which such invoice or debit note pertains or furnishing of the relevant annual return, whichever is earlier; or
(ii) for the period from the date of cancellation of registration or the effective date of cancellation of registration, as the case may be, till the date of order of revocation of cancellation of registration, where such return is filed within thirty days from the date of order of revocation of cancellation of registration, whichever is later.”
In view of the above, ITC can be claimed by the taxpayer if it was not restricted under the time limit prescribed in sub-section (4) on the date of order of cancellation of registration and return is filed within thirty days from the date of order of revocation of cancellation of registration.
These changes reflect the GST Council’s focus on automation, fraud prevention, and simplification of processes.
Issues Involved in GST Registration
Delays in Approval: While automation has improved processing times, manual interventions and technical glitches occasionally cause delays.
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Rejection Without Proper Reasoning: Applications are sometimes rejected without detailed reasoning, leaving applicants to seek redressal through appeals.
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Complexity for Multi-State Operators: Businesses operating in multiple states face challenges obtaining separate GST registrations, increasing compliance burdens.
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Impact of Non-Compliance: Failure to complete Aadhaar authentication or file returns leads to suspension or cancellation of registrations, impacting business continuity.
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Fraudulent Registrations and ITC Misuse: Fake registrations and input tax credit (ITC) fraud have prompted stricter scrutiny, but even genuine taxpayers face penalties for inadvertent errors.
Relevant Case laws
MADRAS HIGH COURT in case of Ramani, w/o. Late. D. Dhamodaran V/s The Commissioner of Commercial Tax [2024] 71 TAXLOK.COM 353 (Madras), held that, the petitioner sought a court order to process her GST Registration application without requiring a No Objection Certificate (NOC) from her in-laws. The court directed the authorities to process the application within two weeks.
ALLAHABAD HIGH COURT in case of K V Development Private Limited V/s State of UP and 2 Others [2024] 69 TAXLOK.COM 227 (Allahabad), held that, the order rejecting the petitioner`s Registration application is wholly non-speaking and cryptic. Petitioner is the successful Resolution Applicant. His Resolution Plan has been approved by National Company Law Tribunal. Thus, GST Registration has been claimed, in that capacity. Accordingly, the impugned order is set aside at this stage itself.
MADRAS HIGH COURT in case of B.C. Mohankumar V/s Superintendent of Central Goods & Service Tax [2022] 49 TAXLOK.COM 110 (Madras), held that, the word `may` of Rule 9(4) of CGST Rules only refers to the discretion to reject and not to blatantly violate the principles of natural justice. If the assessing authority is inclined to reject the application, which he is entitled to, he must assign reasons for such objection and adhere to proper procedure, including due process.
KERALA HIGH COURT in case of West Bengal Lottery Stockists Syndicate Private Limited V/s Union of India [2019] 11 TAXLOK.COM 071 (Kerala), held that the learned counsel for the petitioner argued that in the light of Rule 9(5) of the Central Goods and Services Tax Rules, 2017, if the officer fails to take steps within three working days from the date of submission of the application, the petitioner is entitled for deemed registration.
Conclusion- GST registration remains the foundation of compliance under the GST regime. Recent changes aim to enhance transparency, curb fraudulent practices, and simplify the process for genuine taxpayers. However, challenges persist, ranging from technical issues to procedural complexities. Judicial pronouncements underscore the importance of fairness and accountability in addressing these challenges. |