GST Council Law Panel suggests Aadhaar-like registration procedure to eradicate fake invoicing issues

The law panel of the Goods and Service Tax Council suggested tougher registration procedure to eradicate fake invoicing issues in a two-day long meeting. The panel brought to the fore introducing an Aadhaar-like online GST registration process with live photo and use of biometrics for new applicants under the Goods and Services Tax regime.

The committee meeting panel that consists of central and state officials was called to ascertain the rampant issue of the fake invoices which have been used to evade taxes.

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The GST investigation arm DGGI and Central GST Commissionerates have so far arrested 48 persons — including one woman and three chartered accountants — and have booked 648 cases, besides identifying 2,385 entities.

The committee sources told PTI that such registration facilities can be provided at banks, post offices, and GST Seva Kendras (GSKs). The GSKs can work on the pattern of Passport Seva Kendras to provide new registration facilities with required checks on fake registration. The new registrants who do not opt for Aadhaar authentication at the time of registration may have to submit a recommendation letter by two taxpayers of adequate reliability.

The businesses are to categorised under ‘trustworthy’ and ‘non-trustworthy’ category, the panel suggested. There are about six lakh dormant registrants in GST, sources said.

If, on the basis of document supported credentials, a registrant/dealer falls in the 'trustworthy' category then they can be given registration within seven working days.

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If a registrant is not in the 'trustworthy' category then conditional registration shall be given within 60 working days only after physical verification of the place of business wherein in such cases input tax credit to their buyers shall be allowed only after filing of their return and the dealer/s would be required to pay a certain portion of their liability in cash instead of paying 100 percent tax through ITC.

The committee also suggested the dealer may also be required to deposit a portion of their due taxes through cash or via a bank guarantee of up to two percent of their tax dues, instead of being allowed for 100 percent tax payment through ITC. According to sources, businesses must have some convincing income tax footprint available to establish their financial credibility to avail ITC based payment. The committee also suggested the suspension of the first lot of riskier traders and identification of such taxpayers on the basis of significant criterion including non-filing of return for six months, sources said.

To be categorised under 'trustworthy' category, a registrant/dealer must have good income tax credential, no previous cancellation of GST registration on same PAN for any violation of law and would need to undergo Aadhaar authentication as is required in case of an individual, proprietorship, partners, etc.

The law committee has also suggested discussing these measures with states and other stakeholders before putting it formally to GST Council for further necessary action, sources added.