In every tax system, registration stands as the cornerstone for identifying taxpayers and ensuring compliance with tax regulations within the economy. Under the GST Law, the registration of any business entity entails acquiring a distinct identification number from the relevant tax authorities.
Without registration, individuals or entities are unable to levy taxes on their customers nor can they avail themselves of any Input Tax Credit for taxes paid on their purchases. Suppliers must register in each state or union territory where they conduct business. However, recently, it is found that the GST registration is much more difficult to get after all clearance.
GST Registration Application Timeline
The submission of the application is mandatory through the common portal (GSTN) within thirty days from the date of the registration obligation. Additionally, as per a recent clarification by the GSTN, the approval duration after successful Aadhaar verification is confirmed to be 30 days. Casual and non-resident taxable individuals are advised to initiate their registration process at least five days prior to commencing business operations.
Further, the Proper Officer is required to either raise queries or approve registration within three working days; otherwise, registration will be deemed approved. The applicant must respond within seven working days, beginning from the fourth day after filing the original application. Subsequently, the Proper Officer must either approve or reject the registration application within seven working days.
Therefore, what inquiries should the proper officer pose? Are there any government-issued guidelines governing these inquiries? The straightforward answer is ‘No’.
In the absence of specific guidelines concerning queries, the GST department is requesting documents that may not be readily available to the applicant. Additionally, applicants are required to respond to these queries within seven days, placing them in a challenging situation.
In the ‘X’ platform, an individual has shared the queries raised by the GST department. Most of them were related to the proof of place of business. The applicant who received the query were directed to upload :
Additionally, among the queries raised, the final one pertained to the Goods and Services offered. Given that the applicant primarily provided services, they were instructed to submit previous work contracts, a labour department-issued licence, and an enlistment certificate copy. Obtaining these documents within the given timeframe is challenging for business owners who do not already possess them.
In a separate query, other applicants were requested to provide clarification on the disparity in photos between their registration data and Aadhaar information.
Despite having guidelines specifying the list of documents required for GST registration, officers have interpreted the term ‘…etc’ literally. To clarify, the documents requested for identity proof include Aadhar card, PAN card, and so forth. However, officers are also requesting documents falling within the ‘…etc’ category, posing difficulty for applicants to comprehend.
Indeed, GST evasion rates are significant, and the prevalence of fraudulent firms is also considerable. However, the stringent document requirements are causing genuine businesses aiming to operate legitimately to face difficulties.
During the GST Council meetings, the council members and CBIC chairman declared their intention to enforce stringent measures for GST registrations aimed at combating fraudulent companies and tax evasions. These inquiries can be viewed as part of this enforcement effort, which is also impacting the ‘Ease of doing business’.
Delay in registration poses significant challenges for business owners, leading to potential complications. Rejection of registration necessitates reapplication, which further prolongs the approval process by several months, disrupting business operations. These stringent measures also serve to demotivate taxpayers from adhering to regulations.
Necessity for Government’s Intervention
Government intervention is essential to halt the issuance of unnecessary queries by the GST department. Experts and ordinary taxpayers alike advocate for clear guidelines from the government regarding permissible queries and their contexts. Without proper instructions, the department is lagging the process.
The government aimed to streamline business operations through the introduction of GST. However, the current registration process appears to cease business activities instead of facilitating them. The proper intervention by addressing this issue will definitely impact the revenue of the government positively. Apart from these issues, the applicants are also facing issues in the GST portal which also make it difficult to comply with the regulations.
With the aim of combating fraudulent companies and GST evasion, genuine businesses are bearing the brunt of the repercussions. The government shall address the same and find a way which does not affect the genuine GST applicants. A clear and proper guidelines regarding this will help the applicants and the tax practitioners.
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