Balancing Scrutiny and Simplicity: Streamlining GST Registration for Genuine Businesses
In the context of GST registration, it is essential to balance thorough scrutiny to prevent fraudulent registrations with avoiding undue harassment of genuine applicants. While stringent checks are necessary to curb tax evasion, these should not delay or complicate the process for legitimate businesses. Therefore, detailed instructions have been issued to guide officers in handling applications efficiently, ensuring compliance without overburdening authentic applicants.
Applicants often face challenges during the GST registration process due to frequent clarifications and additional documentation requests, primarily related to proof of the principal place of business, constitution of business, identity details of authorized signatories, owners, accurate classification of goods and services under HSN/SAC codes, and other supporting documents. These repeated queries can lead to delays, making the registration process more complex and time-consuming.
The instruction has been issued in supersession of the old instruction issued vide Instruction No. 03/2023 dated 14th June 2023.
(https://taxinformation.cbic.gov.in/view-pdf/1000532/ENG/Instructions).
Form REG-01 specifies a list of documents required for GST registration. Officers must carefully review this list and strictly adhere to the following instructions. Whenever any one document is listed, officers should rely on that document and avoid requesting additional documents. Furthermore, officers should refrain from asking for original physical copies of the documents when processing registration applications.
The following is the list of documents required for each respective scenario:
1. Documents for Principal Place of Business:
(A) In case of owned property: Any one of the following documents shall be considered valid proof of ownership:
(i) Latest property tax receipt
(ii) Municipal khata copy
(iii) Electricity bill
(B) In case of rented premises/shared premises:
A valid Rent or Lease Agreement, along with any one of the documents mentioned under clause (a) that evidences ownership of the premises by the lessor, should be sufficient.
It has been noted that field formations are often requesting additional documents from the lessor, such as their PAN card, Aadhar card, photograph, or a picture of the lessor inside the property. However, it is advised that any one of the listed documents, or similar documents like a water bill or other documents prescribed under state or local laws that clearly establish the lessor's ownership, should suffice as proof of the principal place of business.
(i) If the Rent/Lease Agreement is not registered, the agreement, along with any one prescribed document (e.g., utility bills), and the lessor's identity proof should be sufficient.
(ii) If the Rent/Lease Agreement is registered, only the agreement and one ownership document are required, and there is no need to request the lessor's identity proof.
(iii) Additionally, if the electricity or water connection is in the name of the tenant (the applicant), the document showing this, along with the rent agreement, should be accepted as valid proof. No further documents related to the lessor should be requested in this case.
The overall focus is on simplifying the process by ensuring that only relevant documents are requested, avoiding unnecessary additional paperwork.
(C) In case the premises are owned by a spouse, relative, or another person:
A consent letter from the owner of the premises, provided on plain paper, shall be submitted along with:
(i) A copy of the owner’s identity proof, and
(ii) Any one of the documents listed under point (a) as proof of ownership of the premises.
This documentation will serve as valid authorization for the applicant’s use of the premises for business purposes.
(D) If rent/lease agreement is not available:
(i) In the absence of a Rent/Lease Agreement, the applicant must submit an affidavit stating that no such agreement exists.
(ii) Along with the affidavit, the applicant should also provide a document supporting their possession of the premises, such as a copy of the Electricity Bill in the name of the applicant.
Additionally, the affidavit must:
(i) Be executed on non-judicial stamp paper of a minimum value.
(ii) Be signed in the presence of a First-Class Judicial Magistrate, Executive Magistrate, or Notary Public.
The purpose of this requirement is to legally confirm the applicant's possession of the premises, especially when no formal rent or lease agreement is in place.
(E) If the principal place of business is in the Special Economic Zone:
If the principal place of business is in the Special Economic Zone or the applicant is a Special Economic Zone developer, necessary documents/certificates issued by the Government of India are required to be uploaded
2. Issues in respect of Constitution of Business:
(a) If applicant is one of the partners, partnership deed/LLP agreement is sufficient.
(b) In cases, where the applicant is Society, Trust, Club, Government Department, Association of Persons or Body of Individuals, Local Authority, Statutory Body and Others etc., Registration Certificate/Proof of Constitution is required to be uploaded by the applicant.
No additional document like Udhyam certificate, MSME certificate, shop establishment certificate, trade license etc. should be sought from the applicant.
Officers are raising unnecessary questions or requesting irrelevant documents based on presumptions, which delays the registration process.
Examples of Common Queries:
(i) Residential address of the applicant/Managing Director/Authorized Signatory not being in the same city or state as the registration request.
(ii) The HSN code of goods mentioned in the application being banned or prohibited for sale in the state.
(iii) The activities mentioned in the registration application being incompatible with the premises.
Guidelines for Officers:
- Officers should not raise queries based on assumptions or issues unrelated to the documents or information submitted by the applicant.
- Queries should only be raised when there is a clear connection to the documents provided, ensuring a smoother and more efficient registration process.
- Officers must carefully examine the documents uploaded by the applicant in FORM GST REG-01 for legibility, completeness, and relevance.
- The details provided in the application should be cross-verified with the uploaded documents to check for authenticity and completeness, particularly the address of the business.
- Applications not flagged as risky and found complete should be approved within 7 working days.
- Risky applications or those requiring physical verification must be processed within 30 days, after physical verification of the business premises.
- If physical verification is required, it must be conducted in accordance with rules and the report must be uploaded in FORM GST REG-30 at least 5 days before the 30-day deadline.
- The verification must confirm the existence of the premises and any discrepancies should be recorded.
- GPS-enabled photographs and documents must be uploaded during verification.
- If the verification jurisdiction is incorrect, it should be reassigned.
Queries (FORM GST REG-03):
Officers may request additional documents or clarifications for the following reasons:
- Incomplete or illegible documents.
- Address mismatches or invalid address proof.
- Incomplete or unclear address information.
- Canceled or suspended GSTINs linked to the applicant’s PAN.
- Queries must be issued within 7 working days (if not flagged as risky) or within 30 days (if flagged as risky).
Response (FORM GST REG-04) , Approval and Rejection:
- The applicant must respond to queries within 7 working days.
- If the officer is satisfied with the response, they must approve the application within 7 working days.
- If the officer is unsatisfied, they can reject the application with reasons in FORM GST REG-05 within 7 working days.
- If no response is received from the applicant within 7 working days, the officer can reject the application, with reasons recorded, and inform the applicant electronically.
- No application should be approved on a deemed basis due to delayed action by officers.
- Only documents mentioned in the prescribed list should be sought, and no presumptive or minor queries should be raised unnecessarily.
To wrap it up, GST registration is all about making the process easier for genuine businesses while keeping checks in place to prevent fraud. Officers should focus on verifying the documents that are clearly required, without adding unnecessary hurdles for applicants. By sticking to the rules, being precise, and addressing only the relevant issues, we can ensure that GST registration remains a smooth and efficient experience for businesses. So, whether you're a seasoned entrepreneur or just starting, the goal is clear: compliance without the chaos!!
Click here to read in detail :
https://taxinformation.cbic.gov.in/view-pdf/1000532/ENG/Instructions
Disclaimer: This material and the information contained herein is intended for clients and other Chartered Accountants to provide updates and is not an exhaustive treatment of such subject. We are not, by means of this material, rendering any professional advice or services. It should not be relied upon as the sole basis for any decision which may affect you or your business.
