GST Registration Suspended from Day One: CA raises Flags Arbitrary Action without Preliminary Inquiry
The professional fraternity is concerned about the instant suspension of GST registration from day one. Suspension basically disables business operations from the start by preventing a taxpayer from issuing tax invoices, collecting GST, or using input tax credits.
A Chartered Accountant ( CA ) has brought up severe concerns about the way in which registrations for the Goods and Services Tax ( GST ) are canceled as soon as they are granted, claiming that the GST authorities are acting arbitrarily without doing any prior investigation. The problem led to controversy about how Rule 14A of the GST Rules' auto-approval system...
A Chartered Accountant ( CA ) has brought up severe concerns about the way in which registrations for the Goods and Services Tax ( GST ) are canceled as soon as they are granted, claiming that the GST authorities are acting arbitrarily without doing any prior investigation. The problem led to controversy about how Rule 14A of the GST Rules' auto-approval system operates.
Raising the issue, CA Nagachandra Somu recalled initial apprehensions about the sustainability of the auto-approval framework. “When the Government introduced auto-approval of GST registration under Rule 14A, with approval to be granted within 3 working days, I initially wondered how the system would sustain itself without being misused,” the CA stated.
https://x.com/snagachandra/status/2002594624058364161?s=20
The auto-approval process was designed to reduce delays, improve ease of doing business, and eliminate discretionary bottlenecks in the registration process. The accountant has shared the screen shot of the suspension of the registration.
However, recent experiences suggest that the system may be swinging to the other extreme. According to the CA, applications for GST registration were filed under Rule 14A and, after approval, bank account details were duly updated as required under the law. Soon after these routine compliances, notices were issued by the department.
“Recently, we applied for a few GST registrations under Rule 14A and subsequently updated the bank account details. Following this, notices of this nature have started being issued,” the CA said. In at least two cases, the registrations were suspended with effect from the very date of registration.
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The immediate suspension of GST registration from day one has raised alarm within the professional community. Suspension effectively disables a taxpayer from issuing tax invoices, collecting GST, or availing input tax credit, thereby crippling business operations at the outset.
What has caused deeper concern is the apparent absence of any prior verification or inquiry before taking such a drastic step. “What is deeply concerning is that the officers appear to have arrived at a suo-motu conclusion that the registrations are fraudulent, without any preliminary enquiry or verification,” the CA pointed out. The suspensions, according to professionals, seem to be based on assumptions rather than evidence.
The professional fraternity is concerned about the instant suspension of GST registration from day one. Suspension basically disables business operations from the start by preventing a taxpayer from issuing tax invoices, collecting GST, or using input tax credits.
Additionally, one of the CA-social media influencer, CA Akhil Pachori, tagging GST council has shared the ‘X’ post of the CA Nagachandra Somu and commented that “This is an Ease of Doing Business measure undertaken by Council, but without verification, this is like denying the benefit by other means. This is not taken in good spirit, people will again resort to applying under normal mechanism if they fear this happening in future.”
https://x.com/akhilpachori/status/2002736792634867861?s=20
Experts note that while the GST Act empowers officers to suspend registration where fraud or serious irregularities are suspected, such power is expected to be exercised after at least a basic verification of facts. Automatic or mechanical suspension, especially without giving the taxpayer an opportunity to explain, runs contrary to principles of natural justice.
On the one hand, to facilitate business, registrations are automatically accepted within three days. However, the very advantage of auto-approval is being negated by the suspension of the same registrations retroactively, frequently from the moment of authorization.
The CA said that safeguards against fraud are necessary but cautioned against overreach. “While preventing misuse is important, blanket suspensions based on assumptions only undermine the credibility of the system and cause unnecessary hardship to genuine taxpayers,” the CA said.
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