Cracking down on tax evaders, the CBIC has asked tax officers to be cautious while processing application for fresh GST registration by those businesses whose earlier registration has been cancelled due to non-compliance.

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The Central Board of Indirect Taxes and Customs (CBIC) also directed tax officers to analyse the information by an applicant in the fresh registration form regarding details of proprietor, director/members of managing committee of associations/board of trustees etc vis-a-vis any cancelled registration having same details. 

Recently, a large number of registrations has been cancelled by tax officers on account of non-compliance.  However, it has come to notice of taxmen that such businesses continue to operate without any registration and are not applying for revocation of cancellation of registration and are instead applying for fresh registration. Instead, many of them are applying for fresh registration, so as to evade taxes which were due under earlier 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 said in its communication to field offices.

The Goods and Services Tax (GST) law allows a person to take separate registration on same Permanent Account Number (PAN) in the same state.  However, a tax officer can reject the application for registration if the information or documents submitted by the applicant is found to be "deficient" if details in relation to earlier registration are suppressed.

Some of the details that may be concealed in the application for new registration are date of commencement of business, date on which liability to register arises, reason to obtain registration etc.  Such persons may also not furnish the details of earlier registrations, if any, obtained under GST on the same PAN.

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"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 cancelled due to non-compliance, the officer would have to check whether the business had filed application for revocation of cancellation of 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.

About 1.2 crore businesses are registered under GST, which was rolled out on July 1, 2017.

"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 presumption of guilt without giving even first opportunity of being heard," AMRG & Associates Partner Rajat Mohan said.