From August 21, 2020, rule 9 of the Central Goods and Services Tax Rules, 2017 provide that in cases where Aadhaar authentication has either not been opted for by the applicant or where such authentication has failed, the proper officer has to mandatorily initiate physical verification of the premises, or in cases where the physical verification is difficult, certain additional documents may be called for by the proper officer for verification before deciding upon the grant of registration.
The present provisions allow for deemed registration upon completion of 21 days of application in such cases if the proper officer has not issued any notice within the said 21 days.
“The list of registrations granted on a deemed approval basis, zone-wise, during the period from 21 August, 2020 to 16 November, 2020 have been circulated to the field formations by the DG, Systems,” the CBIC said.
Rule 25 of the CGST Rules provides for physical verification of business premises in certain cases and includes such verification after grant of registration. All such deemed registrations would be subjected to compulsory post-registration verification.
On completion of verification, if the proper officer has reasons to believe that the registration is liable for cancellation, he shall initiate the proceedings under rule 22 of the CGST Rules.
The CBIC clarified that pending physical verification, notice in FORM REG-17 may be issued in specific cases based on two risk parameters seeking explanation from the registered person regarding the differences and anomalies noticed.
Firstly, where FORM GSTR-1 is filed and FORM GSTR-3B is not filed either for the August or September 2020 tax period.
Secondly, the difference in tax amount, as reported in FORM GSTR-1 and FORM GSTR-3B is more than Rs. 1 lakh (R1>R3B).
On receipt of the reply to the notice, the proper officer would complete the proceedings under rule 22 of the CGST Rules.
“All the verifications must be completed in a time-bound manner, within 3 weeks of these instructions. Zonal Chief commissioners already have the freedom to divert the staff from one formation to another within the Zone to complete the task. A weekly status report to be submitted to the Board in the format enclosed to this instruction,” CBIC said.
The proper officer shall conduct physical verification of the principal place of business and wherever possible, additional place of business, indicated in GST registration FORM REG-01 of the concerned registrant.
During the physical verification, the officer, among other things, would also verify the details namely in case the applicant intends to carry out manufacturing activity, whether capital goods, if required for the said manufacturing activity, have been installed; Electricity connection, bills paid in the relevant period; the size of the premises whether it is commensurate with the activity to be carried out by the applicant; Whether premises are self-owned or is rented and documents relating ownership/ registered lease of the said property; in case of doubt, the inquiry may also be made from the landlord/ owner of the property in case of rented/leased premises; no of employees already employed and record of their employment Aadhaar and PAN of the applicant and its proprietor, partners, Karta, Directors as the case may be and the authorized signatories; and Bank’s letter for up to date KYC.
The CBDT further directed that in addition to the physical verification the proper officer must carry out the preliminary financial verification of the registrants by seeking the various documents and carrying out its scrutiny.
“Aadhaar authentication or where such authentication has failed, there should not be any case where registration is granted on a deemed approval basis. Suitable instructions may kindly be issued to the field formations under your charge,” the CBIC said.Subscribe Taxscan AdFree to view the Judgment