Protecting Your Genuine GST Registration: Key Action Points During the Special Drive Against Fake Registrations

Introduction: The Central Board of Indirect Taxes and Customs (CBIC) has recently launched a Special All India Drive against fake GST registrations. This proactive initiative aims to combat fraudulent activities and protect the exchequer from financial losses. While such drives are essential, genuine taxpayers sometimes face challenges and risks during these actions. To mitigate any potential threats to your GST registration, it is crucial to take certain precautions and follow key action points. This article provides valuable guidance to help genuine taxpayers navigate through this special drive successfully.

Ensuring Compliance and Safeguarding Your GST Registration: To safeguard your GST registration and business operations during the Special All India Drive, consider the following action points:

1. Display Board and GST Certificate: Adhere to Rule 18 of CGST Rules, 2017, which requires prominently displaying your GSTIN certificate at your principal place of business. Additionally, prominently display your GSTIN on the name board at the entry of your registered premises, including the name of the firm, complete address, and GST registration number.
2. Multiple Registrations at the Same Address: If you have multiple GST registrations at the same address, clearly demarcate the areas in your rent agreements. Ensure proper separation and identification of stock or goods related to each registration to avoid confusion or complications.
3. Additional Places of Business: If you operate from multiple premises for supply, receipt, or storage of goods, register these places as additional places of business in your GSTIN. This registration ensures compliance and helps mitigate risks associated with unregistered premises and stock.
4. Aadhar Authentication: Though not mandatory under GST law, consider undertaking Aadhar authentication to strengthen your taxpayer profile. Authentication of Aadhar details can enhance your credibility and help establish trust with the authorities.
5. Review Supporting Documents: Review and update the supporting documents submitted during GST registration or amendments. Ensure lease agreements, sub-lease agreements, and no-objection certificates (NOCs) are renewed and maintained for each place of business. Obtain and retain proof of ownership, such as NOCs, electricity bills, or proper receipts, for all registered premises.
6. Maintaining Accounts and Records: It is mandatory, as per Section 35 of the CGST Act, 2017, to maintain prescribed accounts and records at registered places of business. Comply with this requirement and maintain accurate details of purchases, outward supplies, input tax credit (ITC), and books of accounts at each location.
7. Supplier Compliance Review: Regularly review the GST compliance status of your suppliers. Ensure their GST registrations are active and check their filing status of GSTR-1 and GSTR-3B. Take necessary action if any supplier fails to comply, as their non-compliance can impact your own compliance rating and ITC claims.
8. Consequences of Non-Compliance: Failure to fulfill GST law requirements may result in penalties, with fines up to INR 50,000 under Section 125 of the CGST Act, 2017. Specific penalties are prescribed under Section 122 for certain offenses. Non-compliance can also lead to cancellation of GST registration, blocking of input tax credit under Rule 86A, and recovery of input tax credit claimed from non-existent or fake suppliers.

Conclusion: As the Special All India Drive against fake GST registrations progresses, genuine taxpayers must be proactive in protecting their registrations and businesses. By following the suggested action points, including prominently displaying your GST certificate, maintaining compliance, reviewing supplier compliance, and ensuring accurate records, you can mitigate risks associated with cancellation, penalties, and blocked input tax credit. Stay informed and vigilant, as these measures will help you navigate the special drive successfully while safeguarding your legitimate business operations.

Note: The information provided in this article is based on the CBIC's Instruction No. 01/2023-GST dated 04.05.2023 and recommendations from tax experts. It is advised to consult with a qualified professional for personalized advice related to your specific circumstances.

Team Taxonation