During the lockdown period, many businesses had seen long delays in getting their GST registration confirmed, and found no help on raising the issues with the authorities.
The goods and services tax (GST) administration has lifted a ban on deemed approval for new registrations, which was imposed during the lockdown period for fear that the facility could be misused in the absence of properly functioning GST departments across the country. Several states had reported the trend of newly registered businesses being engaged in circular trading during the lockdown.
For registering as a GST business, a taxpayer has to file an application on the GST Network portal. This application is then allotted to either the central or state tax officials depending on the jurisdictions. According to the law, the official would process the application in three working days but if no action is taken, the same is deemed to be approved.
The GST policy wing issued instructions last week that all registration applications as on June 30 that have remained pending till July 15 be granted deemed approval. Further, applications received post June 30 and pending till July 28 would be deemed approved also.
The instruction also said that due to technical glitches in GSTN, few registration applications were approved even during the lockdown when the facility had been withdrawn. “GSTN has been requested to forward such GSTINs who got deemed approval during the lockdown to the jurisdictional officers. In such cases, wherever required, proper officers may get the physical verification of the premises done,” the letter said.
During the lockdown period, many businesses had seen long delays in getting their GST registration confirmed, and found no help on raising the issues with the authorities. Most such complains were for applications submitted in April and May.
A state tax official said that state’s commercial tax department had found several cases of circular trading – which involved businesses issuing fake invoices among each other to fraudulently avail input tax credit without actual supply of goods and services – with overwhelming participation from businesses registered during lockdown.
“Tax authorities witnessed a sudden surge in GST registrations during the pandemic period, even though other economic indicators like e-way bills, tax collections, and GDP nosedived. Since lockdown is practically over in all states, process for deemed approval of application for registration would be resumed from August 1,” Rajat Mohan, senior partner at AMRG & Associates, said.