Tax sleuths have planned a fresh crackdown on traders practising tax evasion of Goods and Services Tax (GST) by pursuing new registration for their businesses without dismissing a prior one.
Right and duties coexist simultaneously & where it is right, there is a duty to be fulfilled by the citizens. The Goods and Services Tax (GST) law gives the right to an individual to have separate registration on the same Permanent Account Number (PAN) in the same state. But people are not using this facility in fair fashion instead they are using the same to evade taxes which were due under earlier registration.
So, in order to defend such false practices of tax evasion, The Central Board of Indirect Taxes and Customs (CBIC) has ordered tax officers to cautiously process the application for fresh GST registration submitted by those businesses whose earlier registration has been discarded due to non-compliance.
The matter was taken up by the CBIC after it noticed several cases of tax evasion using the re-registration way. Tax authorities have perceived that such businesses sustain their operations in the absence of any registration and are also not applying for revocation of registration. Rather most of them are applying for fresh registration for the GST evasion pending under the pre-registration.
“It is instructed that the proper officer may exercise due caution while processing the application for registration submitted by taxpayers, where the taxpayer is seeking another registration within the State although he has an existing registration within the said State or his earlier registration has been cancelled,” the CBIC informed.
The Central Board of Indirect Taxes and Customs (CBIC) has given strict orders to the tax officers to carefully check and analyze the information like details of proprietor, director/members of managing committee of associations/board of trustees etc, furnished by an applicant in the fresh registration form in the context of any cancelled registration having same details. Recently, a huge number of registrations has been aborted by tax officers due to non-compliance.
Rejection of GST registration means termination of business operations as no commercial activity is allowed to be performed by a business entity that is coming under the GST threshold but is still not registered.
CBIC told that not applying for revocation or cancellation of an earlier registration will be deemed to be a “deficiency” and could be the reason for rejection of an application for new registration for businesses. A tax officer can say no to the application for registration if the information or documents submitted by the applicant is found to be “deficient” when details in context to earlier registration are concealed. Some of the details that may be suppressed in the application for new registration are the date of commencement of business, the date on which liability to register arises, a reason to obtain registration, etc.
“The proper officer may compare the information pertaining to earlier registrations with the information contained in the present application, the grounds on which the earlier registration(s) were cancelled and the current status of the statutory violations for which the earlier registration(s) were cancelled,” the CBIC said.
In cases where the registration has been rejected due to non-compliance, the officer would have to make sure that the business had filed the application for revocation of cancellation of GST registration.
“It is advised that where the applicant fails to furnish sufficient convincing justification or the proper officer is not satisfied with the clarification, information or documents furnished, then, his application for fresh registration may be considered for rejection,” the CBIC said.
Approx 1.2 crore businesses are registered under GST.
A tax expert said, “Many of the taxpayers are unable to cope with the burden of compliances and the pace of GST evolution, committing bonafide mistakes. A blanket push on tax officers to scrutinise all applications with a coloured lens would lead to a presumption of guilt without giving even first opportunity of being heard,”
So far, in the 10 months (April-January) of the current F.Y., total GST collections by the Centre and states stood at over Rs 9.71 lakh crore. The average monthly GST collection in FY19 so far is Rs 97,100 crore as against a target of over Rs 1 lakh crore.
