On request of Guj HC, CA association submitted SOP on GST Registration
Chartered Accountants Association, Surat (CAAS)
Notwithstanding any other procedures for the time being in force for grant of new GST registrations, the following Standard Operating Procedure (“SOP”) shall be followed in letter and spirit by all the field formations while granting the new GST registration and shall be followed as a follow up for the first six months of registration to so that various objectives of due diligence (including but not limited to bogus billing) are achieved:
It is noticed that there is a lack of basic knowledge of law w.r.t. existing laws which are applicable and which are applied in the registration for GST. The following steps shall be followed by the various Jurisdictional Commissionerate prior to the staffing and delegation of work relating to GST Registration:
- All staffing to be made to a separate designated registration unit. The said staff shall be solely responsible for the registration tasks only, and no other task shall be entrusted to them.
- All Jurisdictional Commissioners to educate and impart training to the Proper Officers and their staff which are already engaged or proposed to be engaged in the registration tasks. The education and training shall be in the following key areas which are limited to such Provisions of Act, notifications, circulars, instructions which have a direct implication on the registration aspects:
- Corporate laws like Companies Act 2013, Limited Liability Partnership Act, 2008, Partnership Act, 1932;
- The Co-operative Societies Act, 1912 and the Multi-State Co-operative Societies Act, 2002;
- Transfer of Immovable Property Act, 1882;
- Gujarat Shop and Establishment Act, 2019;
- Notaries Act, 1952;
- CGST Act, 2017 updated till date
- The education as specified in 1 above shall be on a continuous basis and without any compromise on account of leave or other departmental works.
- Sufficient staffing as required by the Proper Officer shall be made. In case of requirement for additional staffing, the same may be made as per extant guidelines for departmental recruitment.
- Periodic monitoring of the rejection applications should be undertaken by the Joint Commissioners to verify officer-wise rejection ratio and to inquire on weekly basis which officer is substantially rejecting 10% or more applications and reasons thereof shall have to be recorded in writing.
The following steps shall be followed by the field formations at the time of receipt of application for new GST registration:
- On receipt of the system validated application for new GST registration from the common portal in Form GST REG-01, the proper officer shall first ensure whether the application is complete in all respects or not. For this:
- In case where Aadhar Authentication is completed the Proper Officer:
- to ensure that all mandatory documents are legible and readable.
- to ensure that valid documents are uploaded.
- In case where Aadhar Authentication is not completed in addition to steps mentioned in (a) above:
- to ensure that the particulars of identity mentioned in the application matches with the alternate document for identity viz. PAN, Election Card, Passport or Driving License.
- Over and above the Aadhar Authentication or otherwise, the following documents shall be sufficient requirement for the purpose of GST registration and no further documents shall be asked by the Proper Officer from the applicant:
- PAN Card of the Applicant as proof of identity
- In case of non-individuals PAN of the Entity as proof of identity;
- PAN Card of the Authorised persons of the Applicant as proof of identity;
- Any one of Passport/Election Card/Driving License as proof of identity as well as address proof;
- In case where premises are owned, any one of Municipal Tax bill / Municipal Tax Receipt / Electricity Bills / Gas Bills / Telephone Bills/ Index Copy (latest or Old);
- In case of rental premises self-attested copy of rent agreement along with self-attested copy of items specified in (v) above pertaining to the owner of the premises.
- In case where family member of the applicant owns the premises, a self-declared consent letter from the family member who owns the premises along with self-attested copy of items specified in (v) above pertaining to the owner of the premises.
- The Proper Officer to bear in mind that the compliance of Aadhar Authentication merely ensures identity of the applicant. However, it does not confirm the physical location or address of the applicant, and for which physical verification is mandatory in the post registration phase after granting of GST registration.
- In case where Aadhar Authentication is completed the Proper Officer:
2. Steps mentioned in para 1(a) and 1(b) above shall be deemed to be a valid compliance of Rule 9(1) for registration documents to be in order, and no further documents shall be asked for. Such applications shall be granted registration under Rule 9(1) and issued registration certificate under Rule 10:
- For Aadhar Authenticated Cases – Immediately on the same day
- For Other Cases – Within 2 working days
3. Where the documents provided by the applicants do not pass the test mentioned in Para 1(a) and 1(b), the Proper Officer shall issue a notice in REG-03 immediately on the same day of application.
4. While issuing queries under REG-03, the Proper Officer shall bear in mind the following:
- Not all the applicants are engaged in the business of bogus billing;
- Invasive inquiries into the business model, experience of the promoters/partners/directors/proprietor, feasibility and legality of business should not be made. Granting of GST Registration is the onerous duty of the Proper Officer to ensure proper charge, levy and recovery of taxes to the treasury of the Government;
- The conduct, tone and language of the notice REG-03 should be friendly and supportive and not be adversarial;
- Unwanted and unrelated documents should not be asked from the applicant;
- Requirement of notarisation has been done away with by The Department of Administrative Reforms and Public Grievances under the Ministry of Personnel, Public Grievances and Pension vide letter No.D.O. No. K- 11022/67/2012-AR dt.17th July 2014, which has initiated the process of abolition of affidavits/certification and notarisation. Instead, the Proper Officer should emphasize documents on self-certification basis from the applicant.
- No other proof of business (existing or proposed) shall be asked from the applicant;
- Unwarranted information related to Authorised Representatives should not be asked for;
- All REG-03 shall be duly reasoned and no notice shall be issued unless the same includes proper and detailed reasons, which are capable of effectively communicating a layman of the nature of deficiency.
5. Still if in response to the queries raised by the Proper Officer in GST REG-03, the applicant fails to provide satisfactory response in GST REG-04, the Proper Officer shall reject the registration application stating the full details, description and the sections of CGST Act, 2017, under which there is violation. Such rejection shall be communicated to the applicant in GST REG-05 duly prepared in word processing document with proper outward numbering, without rejecting the application in GSTN common portal. Such application shall not be rejected for a period of 60 days from the date on which Order under GST REG-05 is issued to the applicant, or if the applicant prefers and appeal against the said order until the disposal of the appeal, whichever is later. This is to ensure that the rejected applications stay in the system despite being legally rejected, since applications once rejected no longer remain active for being edited, in case the appellate authority decides in favour of the applicant.
6. The whole process involved in the registration shall be online without any contact of the Proper Officer with the applicant or his/her authorised representative and shall be completed within a period of 2 working days to confirm with the standards set by the CBIC for granting of GST Registrations.
7. In cases where it is found that the Proper Officer has contacted the applicant before granting/rejecting of GST registration, then severe punitive action shall be taken against such Proper Officer.
The following follow up steps and procedures shall be followed by the various field formations after the grant of GST registration:
1. The Proper Officer shall make site visit of the premises of the applicant who is granted GST Registration within 15 days from the date of granting of GST registration. Eg: For any applicant if GST Registration is granted on 30th April, then physical verification of the site of business shall have to be completed by 15th May, to ensure that the applicant conducts the business from the declared place of business. If the applicant is not conducting the business at the declared place of business as aforesaid, there can be chances of wrongful use of GST Registration, in which case the physical verification as envisaged above within 15 days leaves lesser window for the applicant intending to wrongfully use the GST registration, to transfer GST ITC through GSTR-1 to his recipients of goods or service, if registration of such applicant is cancelled under Rule 21(a) by the informed Proper Officer who has visited the site of business physically;
2. Any delay in the said period of completion of GST Registration shall be penalized with punitive departmental action;
3. Once GST Registration is granted the Proper Officer shall make a ledger scrutiny online on a staggered basis on frequency as given in Step 2 and manner as given in Step 3, into the transactions and ITC under Electronic Credit Ledger, to verify and ascertain the genuineness of the transactions being undertaking by the newly registered applicant;
4. The Proper Officer shall make ledger scrutiny in the following frequency:
|First Month||On Weekly basis|
|Second and Third Month||On Fortnightly basis|
|Forth to Sixth Month||On Monthly basis|
5. The Proper Officer shall make inquiry:
- into the Electronic Credit Ledger: To ensure that the transactions undertaken represent gradual and organic growth and do not suddenly rise in numbers
- into the Electronic Cash Ledger
- which is non-invasive in manner and without contacting the registered person for seeking invasive or alerting questionnaire.
6. Periodic monitoring of the queries generated by the Proper Officers should be undertaken by the Joint Commissioners themselves on a weekly basis to verify officer-wise unwanted queries generated in the following categories and to set accountability for wrongful query generation:
- Documents are not legible or visible;
- Feasibility of registration on residential premises;