The Assam Goods and Services Tax (GST) Department has released a circular on 7th July 2023 for mandatory furnishing of valid rental agreement or lease deed for GST registration. The department aimed to prevent fake registrations and duping of government revenue.
As per the circular released by the department, it has been noted that numerous dishonest individuals or entities have obtained GST registration by submitting counterfeit documents such as fake electricity bills, rental agreements, and others.
Once registered, these fraudulent parties generate counterfeit invoices without any actual supply of goods or services, thereby establishing a network of fake input tax credit (ITC) and deceiving the government exchequer. This illicit activity leads to substantial losses in government revenue.
To avoid instances of registration fraud and safeguard the government’s revenue, it has been instructed that the registering authority should not grant GST registration unless the applicant provides a legitimate rental agreement or lease deed that is duly registered with the Sub-Registrar or another competent authority authorized for rental/lease deed registration.
The department also emphasised the importance of strictly adhering to these instructions and warned that failure to do so would result in facing consequences.
The 50th GST Council meeting held on 11th July 2023 has recommended to amend necessary sections of the CGST Act to avoid the fake registrations. The Central Board of Indirect Taxes and Customs (CBIC) Chairman Vivek Johri has stated that a tight registration process will be implemented to eliminate the possibility to avoid the fake GST registrations. The chairman also stated about the mandatory physical verification.
Also, another landmark decision taken by the finance ministry is to include the GSTN into the PMLA provisions. However, the Revenue Secretary Sanjay Malhotra clarified that the amendment including Goods and Services Tax Network (GSTN) with the Prevention of Money Laundering Act, 2002 does not have any connection with the GST amendment.
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