CBIC to assign risk rating to GST applications, taxmen to verify documents

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In order to check fake GST registration, CBIC will assign a risk rating to all applications and tax officers will cross-verify the documents submitted by the applicants with municipal records.

The Central Board of Indirect Taxes and Customs (CBIC) on Wednesday issued instructions to field offices after it came to light during the ongoing two-month special drive that fraudsters have misused PAN and Aadhaar numbers of people to obtain GST registrations.

In the ongoing all-India drive, Centre and State GST officers have detected over 15,000 fake registrations and are initiating punitive action against the perpetrators. They are also trying to find out the mastermind who are the real beneficiaries.

As per the instructions, the Directorate General of Analytics and Risk Management (DGARM) and GST Network would give a risk rating -- High, Medium and Low -- to each application for registration, based on data analytics and risk parameters.

This will facilitate a "targeted approach in verification and processing of registration applications", the CBIC said, adding special attention needs to be paid to the cases where a 'high' risk rating has been assigned.

As regards the verification, tax officers will have to "carefully scrutinise" the documents submitted by applicants and "correlate and cross-verify" the same with the uploaded documents to check the authenticity of the applicant.

The details of the address of the principal and additional places of business and the corresponding documents may be "closely scrutinised" to verify correctness.

"To the extent possible, the authenticity of the documents furnished as proof of address may be cross-verified from the publicly available sources, such as websites of the concerned authorities such as land registry, electricity distribution companies, municipalities and local bodies, etc," the CBIC said.

The instruction said that verification of applications for registration by the proper officers is one of the most crucial steps in the direction of preventing the menace of fake or bogus registrations.

"While numerous initiatives have been/are being undertaken on the policy and systems level, it is pertinent to strengthen the process of scrutiny and verification of such applications for registration at the end of tax officers," it added.

The instruction also asked field officers to check whether the registrations has been obtained on the same PAN earlier, either within the same state or in other states. In such cases, the status of the said PAN as well as the compliance record of the said GSTINs may also be checked from the portal.

Where the officer finds the application to be deficient, further clarification would be sought from the applicant and if no response is received, such application would be rejected.

Where the applicant has either failed to undergo authentication of the Aadhaar number or has not opted for authentication of the Aadhaar number, the GST officer would initiate the process for physical verification of the place of business.

AMRG & Associates Senior Partner Rajat Mohan said these guidelines have laid out additional responsibility on tax officers to ensure that unscrupulous elements are not allowed to enter the Goods and Services Tax (GST) system.

"With these guidelines, Government would be able to restrict the entry of fraudsters in the GST supply chain," Mohan added.