The implementation of the Goods and Services Tax (GST) framework in 2017 revolutionized India’s indirect taxation system. Over time, amendments and judicial interpretations have further refined the GST registration process. With its focus on automation, transparency, and fraud prevention, the GST Council continues to streamline procedures. This article delves into the latest changes in GST registration, common issues, and the implications of recent judicial pronouncements, ensuring a detailed understanding for taxpayers and businesses.
Latest Amendments in the GST Registration Process
1. Mandatory Aadhaar Authentication for Registered Persons
The introduction of Rule 10B of the CGST Rules through Notification No. 38/2021-Central Tax dated 21st December 2021 mandates Aadhaar authentication for GST applicants. This initiative aims to curb fraudulent registrations and enhance the verification process. Failure to comply can result in delays or outright rejection of applications, emphasizing the need for applicants to fulfill this requirement promptly.
Biometric-Based Aadhaar Authentication and Document Verification
Under Rule 8 of the CGST Rules, 2017, applicants are subject to identification on the GST portal based on data analysis and risk parameters. This includes:
- Biometric-based Aadhaar authentication.
- Photograph capture of the applicant.
- Verification of original documents submitted during registration.
To address regional concerns, GSTN has issued advisories, including a recent one dated 15th December 2024, specifically targeting applicants from Chhattisgarh, Goa, and Mizoram.
Applicants now receive one of two links after submitting Form GST REG-01:
- OTP-Based Aadhaar Authentication: Applicants proceed with the usual process.
- Appointment at GST Suvidha Kendra (GSK): Individuals must schedule a visit for biometric authentication and document verification.
The streamlined process underscores the government’s commitment to fraud prevention and procedural transparency.
2. Nationwide Campaign Against Fake Registrations
In response to widespread misuse of GST registrations, Instruction No. 02/2024-GST dated 12th August 2024 launched the second special all-India drive against fraudulent registrations. This initiative involves:
- Verification of suspicious GST registrations.
- Prompt remedial measures to prevent revenue loss.
The campaign aims to maintain the integrity of the GST system while protecting government revenues.
3. Automatic Suspension of Registration for Non-Compliance
Rule 21A of the CGST Rules allows automatic suspension of GST registration in cases of non-compliance. Key triggers include:
- Significant discrepancies between GSTR-1 and GSTR-3B returns.
- Breach of Rule 10A by the registered entity.
This provision ensures swift action against erring taxpayers while emphasizing the importance of compliance.
4. Extended Time Frame for Revocation of Cancelled Registrations
Earlier, Rule 23 of the CGST Rules permitted taxpayers to apply for revocation of cancelled registrations within 90 days. The CGST (Second Amendment) Rules, 2023, effective from 1st October 2023, revised this period to 30 days from the date of the cancellation order.
This amendment reflects the GST Council’s focus on expediting the revocation process while ensuring adherence to procedural timelines.
5. Revised Threshold Exemption for Registration
Notification No. 10/2019-Central Tax, dated 7th March 2019, raised the GST registration threshold for businesses exclusively dealing in goods to ₹40 lakhs. This exemption applies only to entities with annual turnovers below this limit and solely involved in the supply of goods.
The revised threshold provides relief to small businesses, reducing their compliance burden while supporting their growth.
6. ITC Eligibility for Revoked Registrations
Section 16(6) of the CGST Act, inserted via Section 118 of the Finance (No. 2) Act, 2024, clarifies ITC eligibility for taxpayers whose registrations were cancelled but later reinstated. Key highlights include:
- Taxpayers can claim ITC for invoices/debit notes from the effective date of registration cancellation until its revocation.
- ITC claims must align with the timelines stipulated in Section 16(4).
This provision aims to ensure genuine taxpayers are not disadvantaged due to procedural delays.
Challenges and Issues in GST Registration
1. Approval Delays
Despite automation, manual interventions and technical glitches occasionally delay application approvals, impacting business operations.
2. Unjustified Rejections
Registrations are sometimes denied without adequate reasoning. This forces applicants to navigate the appeals process, causing unnecessary delays and expenses.
3. Multi-State Compliance Complexity
Businesses operating across multiple states face increased compliance burdens due to the need for separate registrations in each state.
4. Impact of Non-Compliance
Failing to fulfill Aadhaar authentication or file mandatory returns can result in suspension or cancellation of GST registrations, disrupting business continuity.
5. Fraudulent Registrations and ITC Misuse
While stricter scrutiny aims to curb fake registrations and ITC fraud, genuine taxpayers sometimes face penalties for inadvertent errors, highlighting the need for balanced enforcement.
Judicial Pronouncements Shaping GST Registration
1. Procedural Lapses in Cancellation: Allahabad High Court
In the case of Shree Shyamji Traders vs. State of U.P. & Others (2024), the Allahabad High Court quashed a cancellation order citing procedural lapses. The court emphasized that cancellation orders must outline specific violations under Section 29(2) of the CGST Act and provide a fair hearing to the applicant.
2. Delay in Revocation Applications: Orissa High Court
The Orissa High Court in Shree Jay Guru Security Agency vs. Superintendent of CGST (2024) condoned delays under Rule 23 of the OGST Rules. It directed the department to consider revocation applications upon fulfilling payment obligations and procedural requirements.
3. ITC Denial Due to Late Claims: Madras High Court
In Winet Communications vs. Superintendent (2024), the Madras High Court set aside an order disallowing ITC due to delayed claims. The court ordered reassessment in light of the Finance (No. 2) Act, 2024 amendments, highlighting the need for procedural fairness.
These cases underscore the judiciary’s role in ensuring transparency and fairness in GST registration processes.
Conclusion
GST registration remains a cornerstone of compliance under the GST regime. The recent amendments reflect a focus on automation, fraud prevention, and procedural simplification. However, challenges such as delays, unjustified rejections, and compliance complexities persist, emphasizing the need for continued reforms.
At TaxGroww, we are committed to providing expert guidance and support for navigating the intricacies of GST compliance. Whether you’re a seasoned taxpayer or a new registrant, our team is here to simplify the process for you. Stay tuned for our upcoming articles, where we’ll explore more updates, compliance tips, and insights into India’s dynamic tax landscape.