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January 25, 2022

Tax professionals represent FM for standard process for GST registration

by CA Shivam Jaiswal in GST

Tax professionals represent FM for standard process for GST registration

Respected Sir(s) / Ma’am

Subject: Representation with respect to hardships being faced while obtaining new GST registration number & Request to issue suitable SOP and Trade Notice or Circular or Guidelines with respect to new GST registration.

Greetings from the All Gujarat Federation of Tax Consultants and Income Tax Bar Association, Ahmedabad.

All Gujarat Federation of Tax Consultants (AGFTC) established in the year 1992, is the first & only Apex Regional Body of Advocates, Chartered Accountants & Tax Practitioners of Gujarat, having membership strength of 1500 professionals and Institutional membership of 34 from all the Districts of Gujarat.

Income Tax Bar Association is one of the first professional associations established in the year 1947, and composed of tax professionals, Advocates & Chartered Accountants as members, with membership strength of approx. 950 from all over Gujarat.

The prime objective of both these Associations is not only to work for the cause of its professionals but also to educate the public at large and to act as a catalyst between Citizens & Government Authorities.

AGFTC regularly organizes seminars, lectures on tax advocacy and legal awareness in Mofussil regions across Gujarat.

About GST & GST registration process

As we all are well aware that GST is backbone of all businesses. For any activity from Manufacturing, Trading to Service providers, obtaining GST number is necessary to carry out business and grow it. Also, these GST registered persons contribute directly to the revenue of the exchequer and GDP of the nation.

Post introduction of GST in July, 2017, all the application for obtaining new registration number has to be done through common portal of GST (www.gst.gov.in), which is a centralized portal for entire India. The form provides fields for various information required for obtaining GST registration, uploading documents in form of Registration Certificate, Photo of Responsible Person(s), Letter of Authority or Resolution (if applicable) and Address Proof of Principal Place of Business and Additional Place of Business with limit ranging from 100 KB to 2 MB for various fields and subject to selection of document type.

Apart from that, it requires OTP based validation of Primary e-mail ID & Mobile Number and verifies details of PAN of each and every person from the CBDT database. Also, there is an option to submit the application with Aadhar Verification (e-KYC) of Primary Authorized Person through UIDAI database.

This application then goes to workflow of an officer of SGST or CGST having jurisdiction as mentioned in the application (based on the location of principal place of business) and the officers have powers to grant registration based on submitted application and attached documents or to raise queries and ask for further documents with respect to such registration or reject the application for registration.

The time period for approval or seeking additional information / clarification / documents relating to the application is 7 (seven) working days from the date of submission of the application in case of Aadhar authentication and 30 (thirty) working days in cases where Aadhar authentication is not opted for.

Major issues being faced while obtaining registration

We wish to bring to your notice about the major issues being faced by all the tax professionals and persons who are applying for registration under GST Act.

1. Fixed Application Form with Limitations: The application form has fixed fields to provide details and limits size of documents to be uploaded. For most of the fields it is 100 KB. For uploading documents in supporting of principal place of business it is 100 KB for electricity bills etc. and 2MB for rent agreements etc.

Thus, a person can provide a very limited details at the time of application, even though he / she is able to provide more details, which is generally asked by officials of the department.

2. Legible Documents and Scanning Limits: Scanning documents and resizing the same in 100 KB or 2 MB is not an easy task for most of tax professionals and persons where it is not even technically possible to scan or reduce the clear and legible copies of rent agreements, lease deeds and other documents which can give details about ownership of the property, which due to legal provisions runs in to multiple pages.

It requires moderate technical knowledge and good and advanced hardware in form of scanners, which can provide such small sized legible scanned copies under 2 MB. It is too difficult for everyone and especially those belongs to the bottom of the pyramid.

3. No Definite List of KYC / Registration Documents: There is no definite list of KYC documents for ID & Address & Business Registration documents provided in GST. This adds another issue where officials ask for KYC documents as per their own wish even though valid KYC / Registration documents are already submitted by the person.

As an interesting example — under ease of doing business, the Ministry of Corporate Affairs has integrated registration under GST Act, PF, ESIC along with incorporation of company (through form AGILEs). There are numerous cases, where SGST officers have raised query or even not granted GST registration over the same documents on which Company is Incorporated after inspection of documents by MCA.

4. Officers asking for Irrelevant Details / Documents: The recent experience of all the tax professionals are almost similar where an application is made, the notice seeking clarification or additional information, or documents is issued with few totally irrelevant details asked for. In fact, each officer is asking details and documents as per whims rather than application of mind.

Few of the examples are quoted here:

  • Please provide business experience of the proprietor
  • Please provide business details in brief
  • Please provide brief description of services
  • Please upload Aadhar Card & PAN Card Copy
  • Please upload Residential Premises proof document (Electricity Bill, Index Copy, Municipal Tax Bill etc.)
  • Please upload Notarized Rent Agreement / Consent Letter
  • Please upload Notarized ID Proof / Original Copy of ID Proof / Self Attested Copy
  • Please upload Police Verified Rent Agreement
  • Please provide Authorized Representative Letter
  • Please upload legible copy of Rent Agreement /Electricity Bill

The list is much longer as there is no end. We have attached sample of such notices collected from members of the associations for your reference and to highlight the gravity of the situation where we are moving exactly 180-degree opposite to ease of doing business even before one get the most basic registration for carrying business.

We want to emphasize here that all the questions are irrelevant as well as outside scheme of registration under GST, where fields for such things are NOT PROVIDED AT ALL.

5. Issues at the time of Spot Visit: The officers doing spot visit also asking for documents in irrational manner. Every officer has his own list in absence of standard set of documents list required. There are instances reported by the members that the businessmen are asked to get their photos captured with the business premises at the time of spot visit. Also there are cases that visit is done at odd hours and when premise are closed, applications are rejected.

6. Registration not Granted on Residential Premises: The officers turn harsh and reject the applications seeking GST registration at the Residential Premises. Especially in case of service providers, who does work from home and provide services, who even do not need to use commercial premises at all, face troubles due to the same. Even in some of the cases, “NOC from secretary of the residential society”, “Permission from municipal corporation to perform commercial activity from residential premises” etc. are also being asked.

Also, this demand from the officers of the GST department is violation of Article 19(1)(g) (Right to practice any profession or to carry on any occupation, trade or business to all citizens). The applicant may be required to obtain Shop & Establishment or Professional Tax, or Similar registration as may be required by local body but asking for Commercial Tax Bill or Electricity Bill is totally outside purview of the officers of GST.

7. Extreme Delay in Granting Registration: GST registration is one of the most basic requirements of carrying out business. It is the fiduciary duty of the officers too to support the environment in which trade or business or profession can grow without any hindrance. However, for most of the cases, the businessmen face bad experience on very first point — GST registration. In almost all cases, the notice seeking clarifications is issued by default, which unnecessarily extends the time limits stipulated (7 working days) even without fault of the person.

Issues faced by department

While representing the issues at local level, the common answer from officers is that this exercise is done to stop dummy registrations which fuel the issue of Bogus Billing faced by the department and it is indeed a very serious issue.

However, this exercise turns nightmare for trade and business at large. As an accepted principal in criminal law, it is better that ten guilty persons escape than that one innocent suffers. However, when it comes to GST, it is sufferance for 99 so that one with mala fide intention can be prevented.

When we are in 21′ century and Government is pushing Artificial Intelligence & Risk Management as inbuilt tools for the tax compliance systems, rather than making things complicated for all, proper verification and risk management system can be in place to avoid such incidents.

Our Suggestions

To strike balance between miseries of the taxpayers & tax professionals and problem of department, we suggest that—

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