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Genuine Sellers' GST License Suspension Could De-rail Drive Against Fake GST Registrations
The industry body recommends the implementation of a robust process that allows genuine entities to present their case and provide the necessary documentation, reducing the compliance burden
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The current two-month all-India drive announced by central and state tax administrations to detect and eliminate fraudulent GSTINs is creating challenges for genuine online sellers, said Forum for Internet Retailers, Sellers and Traders (FIRST) India.
The industry body said that unlike the previous drives, the jurisdictional officers are empowered not only to verify but also to suspend the licenses during the drive.
The government has allowed businesses to register for GST using a virtual place of business (VPOB) address, as long as the virtual office provider is registered with the government and has obtained the necessary approvals, it added.
"However, it has been found that the officers verifying GST are insisting on physical records along with the presence of employees and/or directors. As most of the online sellers register their places of business as their chartered accountant’s premises or in a co-working place affording them cost benefits and better compliance, the current drive could cause immense damage to the genuine small sellers," it stated.
The industry body recommended the implementation of a robust process that allows genuine entities to present their case and provide the necessary documentation, reducing the compliance burden.
It also urged authorities to provide comprehensive knowledge to tax officers at the ground level about existing provisions and judicial precedents to help curb fake registrations and safeguard the interests of genuine sellers.
"Ensure fair and transparent investigations for taxpayers and MSMEs flagged during the drive. Expedite the resolution of cases related to genuine sellers by establishing a timely redressal mechanism as delay in resolving these cases can have severe financial implications," it recommended.
FIRST India also urged authorities to fast-track remediation to help prevent disruption in operations and growth.
Vinod Kumar, President, India SME Forum and Trustee and President, FIRST India said, “In the current global economic slowdown scenario, the small sellers should be encouraged to utilize the provisions made by the government to grow their businesses."
Kumar added that expecting the small sellers to adopt a traditional office set-up or have specific demarcation for goods in the warehouses can result in unfair cancellation of their GST licenses even though they are compliant with the law.
"It is crucial to ensure that tax officers at the ground level are familiar with the existing provisions, circulars, FAQs, judicial precedents, and other relevant information during this special drive to facilitate a successful and hassle-free process," he said.