the essay of 23 April 2025 · the untouched capture
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<p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399">APRIL 23, 2024 </font></strong></font></p>
<p align="center"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>From Licence Raj to Registration Rage </strong></font></p>
<p align="center"><strong><u><font size="2" face="Verdana, Arial, Helvetica, sans-serif">By Vijay Kumar </font></u></strong></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBIC</font></strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">, the Board – the ‘Central Board of Indirect Taxes and Customs', which is almost the Apex Authority for GST matters in the Country - has received references about difficulties being faced by applicants in getting a GST registration. The Board feels that </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#F3DBCF">"While on one hand, there is a need to prevent registration of fraudulent firms created for passing on input tax credit (ITC) without any underlying supply, on the other hand, there is a need to ensure that genuine applicants seeking registration are not unduly harassed." </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Some of the important issues include, but are not limited to: </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Clarifications being sought by the officers with respect to information submitted in the application FORM GST REG-01 </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Seeking of additional documents which are not prescribed in the List of Documents appended to FORM GST REG-01. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. While processing the application, avoidable clarifications are being sought by the officers leading to delay in getting registration as well as rejection of applications. </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board's analysis reveals that these were mainly on account of - </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Proof of principal place of business, </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Constitution of business, </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. Identity details of authorized signatory, owner etc. </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board has now issued comprehensive instructions to take care of the latest developments and to provide clarity to the officers for processing of registration application. <a href="https://taxindiaonline.com/gst/details?id=33267&view=notification&type=notification" target="_blank"><strong>CBIC Instruction No. 03/2025-GST; Dated: April 17, 2025</strong> </a></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board reminds that an <strong>indicative </strong> list of documents has been prescribed in FORM GST REG-01 and wants the officers handling registration applications to go through the documents list and strictly adhere to the instructions in respect of processing of registration applications in the three categories mentioned above. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Documents in respect of Principal Place of Business: </strong>The statutory Form REG-01 has prescribed the documents required to be uploaded: </font></p>
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<table width="90%" border="1" align="center" cellpadding="3" cellspacing="0">
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<td valign="top"> </td>
<td colspan="2" valign="top"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Proof of Principal Place of Business: </strong></font></td>
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<td valign="top"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">a </font></td>
<td valign="top"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">For Own premises </font></td>
<td valign="top"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Any document in support of the ownership of the premises like latest Property Tax Receipt or Municipal Khata copy or copy of Electricity Bill. </font></td>
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<td valign="top"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">b </font></td>
<td valign="top"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">For Rented or Leased premises </font></td>
<td valign="top"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A copy of the valid Rent / Lease Agreement with any document in support of the ownership of the premises of the Lessor like Latest Property Tax Receipt or Municipal Khata copy or copy of Electricity Bill. </font></td>
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<td valign="top"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">c </font></td>
<td valign="top"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">For premises not covered in (a) and (b) above </font></td>
<td valign="top"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A copy of the Consent Letter with any document in support of the ownership of the premises of the Consenter like Municipal Khata copy or Electricity Bill copy. For shared properties also, the same documents may be uploaded. </font></td>
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<td valign="top"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">d </font></td>
<td valign="top"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">For rented/leased premises where the Rent/lease agreement is not available </font></td>
<td valign="top"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">An affidavit to that effect along with any document in support of the possession of the premises like copy of Electricity Bill. </font></td>
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<td valign="top"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">e </font></td>
<td valign="top"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">If the principal place of business is located in a Special Economic Zone or the applicant is a Special Economic Zone developer </font></td>
<td valign="top"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Necessary documents/certificates issued by Government of India are required to be uploaded. </font></td>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now, Board clarifies: </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#ACDFFB">It is to be noted that any one of the documents mentioned in the said list or any similar document such as water bill or any other document prescribed under the State or the local laws which clearly establishes the ownership of the premises submitted by the applicant should suffice. Any one document uploaded on the portal will be sufficient and </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#FFFF00">no additional document should be requested </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#ACDFFB">from the applicant for proof of ownership of the premises of the applicant. While processing registration application, query should not be raised by the officer seeking original physical copy of these documents. </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board has observed that: </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#ACDFFB">Additional documents of the lessor are being sought by the field formations such as his PAN card, Aadhar Card, photograph of the lessor in front of/or inside the property, etc. It is hereby advised that any one of the documents mentioned in the said list or similar documents such as water bill or any document prescribed under the State or the local laws which clearly establishes the ownership of the premises by the lessor should be sufficient proof of the principal place of business. </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Apparently, some GST officers were playing detective, demanding the life story of your landlords, including their childhood photos and DNA samples. The Board has gently reminded them that they're registering a business, not conducting a background check for a spy movie. One ownership document for the landlord's property should suffice - unless they suspect your landlord is a figment of your imagination, conjured up to evade taxes. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Various unwarranted documents are being sought by raising presumptive queries. Some of the common queries raised are: </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Residential address of the applicant/Managing Director/Authorized Signatory is not in the same city or the State where the registration has been sought; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. HSN code of goods mentioned by the applicant in Registration application is banned or prohibited for sale in the State where the applicant wishes to conduct business; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. The kind of activities mentioned in the registration application cannot be conducted from the particular premises etc. </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board instructs that Officers handling registration applications should not ask any presumptive query which is not related to the documents or information submitted by the applicant. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It's like they had a crystal ball that predicted your future tax evasion based on your pin code. The Board has politely asked them to stick to the documents, not their gut feelings. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board has also issued instructions on processing of registration application. </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Where applications have not been flagged as risky on the common portal based on data analysis and risk parameters, and the same are found to be complete and without any deficiency, the officers should approve the application within 07 working days of submission of application. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. While processing the applications for registration, <strong>if any document apart from the listed documents is required to be sought, the officer shall seek the same only after the approval of the </strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#FFFF00" span="span"><strong>concerned </strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Deputy/Assistant Commissioner. </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. Further, the officer shall also ensure that queries are not raised for minor deficiencies which are not relevant for establishing Proof of Place of Business or Constitution of Business etc. </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is difficult to understand why the Deputy/Assistant Commissioner should be <em>concerned </em>. Perhaps what they meant was the Deputy/Assistant Commissioner concerned. A ‘concerned Deputy Commissioner' is a <em>worried </em> Deputy Commissioner. How do you find out whether your Deputy Commissioner is worried or not? A </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#F3DBCF">Deputy Commissioner concerned </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">is a relevant responsible Deputy Commissioner and a </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#F3DBCF">concerned Deputy Commissioner </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">is a worried Deputy Commissioner! </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board has advised Chief Commissioners: </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">i. Closely supervise the status of processing of the applications of registration, including physical verifications, nature of queries being raised, deemed registrations etc., through periodic review within their Zones; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">ii. </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#F3DBCF">Strict action may be taken against the officer deviating from these instructions ; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">iii. Post sufficient staff for handling registration applications to ensure timely disposal of registration applications; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">iv. Issue trade notices to address unique local systems to provide for acceptable documentary evidence to be submitted with the application. </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">While the Board deserves all praise for issuing these comprehensive instructions, it is surprising that such instructions have to be issued at all even seven years after GST came into existence. Board is aware that there are issues and is ready to find solutions by issuing instructions to follow the statutory requirements which the officers are any way required to follow. Following Borad instructions is not really a favourite pastime in the field and perhaps Board has to issue another Circular soon that disobeying these instructions will be viewed seriously. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Two months ago, in these columns, I reported a strange case where registration was refused because the applicant and his authorised representative did not belong to the State where registration was sought and the poor applicant had to approach the High Court to get a GST Registration. (<strong><a href="https://taxindiaonline.com/news/details?id=50520&view=column" target="_blank">NO GST Registration because you are from another State!</a></strong><a href="https://taxindiaonline.com/news/details?id=50520&view=column" target="_blank">)</a></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Do the officers believe that granting registration is a favour to the taxpayer? Registration is not a favour; it's a statutory requirement – if at all there is any favour, it is a favour to the department, not the assessee. Are you not working against the government which pays you rather well by refusing registration and thereby taxes? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">To start an enterprise, the trader has to organise several services and permissions like land, building, electricity, water, pollution and what will happen to him after all these, if he is told that he cannot run his business because he belongs to another State? And he has to approach the High Court to get a simple registration for the good and simple tax? The first step in this mega maze is registration and for that you have to go to the High Court! Is a High Court meant for trivialities like granting GST registration? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Licence Raj seems to be still alive! In the early days, we used to have Central Excise Licence, Custom House Agents Licence, Gold Control Licence etc., Over the years the very word <em>licence </em> created a bad impression of permissions, controls, regulations, inspectors and the whole Raj in all its loathing glory. So, the licence raj gave way to the registration era; no, the raj remains – only the name licence has been changed to registration. What's in a name? That which you call a licence, called by any other name is equally stressful. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And Board feels that "there is a need to prevent registration of fraudulent firms created for passing on input tax credit (ITC) without any underlying supply…" </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The whole gamut of investigation, fraud evasion etc., in GST seems to be revolving around input tax credit (ITC). If we plug that one loophole, we can all live happily with GST. Can't we evolve a system whereby credit is given only if GST is paid and if GST is paid, should we bother too much about underlying supply? Apparently, preventing fraudulent firms from leeching off the input tax credit (ITC) while simultaneously not unnecessarily tormenting genuine applicants is... tricky. </font></p>
<p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Until next week </strong></font></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Comments/feedback welcome at <a href="mailto:vijaywrite@tiol.in">vijaywrite@tiol.in </a> or 9848111243 (WhatsApp) </font></strong></p>
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