Problem: Fake registrations and bogus invoices are causing revenue loss to the government. Fraudsters obtain fake GST registrations and issue invoices without any actual supply of goods or services, passing on fake input tax credit to recipients.
Modus operandi: Fraudsters misuse the identities of others to obtain GST registration. They use forged documents like electricity bills, property tax receipts, and rent agreements. Some create multiple Aadhaar cards with the same photo but different names. They even manipulate Aadhaar cards of economically weaker individuals by changing their phone numbers.
Solution: Instruction No. 01/2023-GST has been issued for a special all-India drive against fake registrations, with coordinated action by Central and State tax authorities.
Importance of verification: Verifying registration applications is crucial in preventing fake or bogus registrations. Strengthening the scrutiny and verification process by tax officers is necessary.
Guidelines for verification:
a. Officers must immediately scrutinize the application and uploaded documents.
b. Documents should be legible, complete, and relevant. Officer must check the authenticity of the applicant and cross-verify details.
c. Risk ratings provided by DGARM should be considered. High-risk cases need special attention.
d. Check if the PAN is linked to previous registrations, cancellations, suspensions, or rejections. Risky business addresses and suspicious proof of address require careful examination.
e. Issue notice in FORM GST REG-03 if the application is deficient, seeking clarifications or additional documents.
f. Examine the response in FORM GST REG-04. Approve or reject the application based on satisfaction. Reject applications with no response within the time limit.Timely actions: Applications must be processed within the prescribed time limit. Negligence by officers should be strictly addressed.
Deemed approval cases: In cases of deemed approval or high-risk ratings, physical verification of the business must be conducted by the Commissionerate within 15 days of registration.
Supervision: Principal Chief Commissioners/Chief Commissioners should closely supervise the application processing and physical verifications within their zones.
Difficulties: Any implementation difficulties should be reported to the Board for resolution.
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