Background:
Earlier, the 50th Meeting of the GST Council was held on July 11, 2023 in New Delhi, wherein it was recommended to amend Rule 21A of the Central Goods and Services Tax, Rules, 2017 (“the CGST Rules”) to strengthen the registration process and to deal with the menace of fake and fraudulent registrations effectively.
Recommendation to provide the details of bank account (linked with name and PAN of the registered person) to be furnished within 30 days of the grant of registration or before filing the statement of outwards supply under section 37 of the Central Goods and Services Tax, Act, 2017 (“the CGST Act”) in Form GSTR-1/ IFF, whichever is earlier. In the absence to do so, the registration would be suspended and the person would not be allowed to file Form GSTR-1. Revocation of registration would be allowed only upon furnishing the bank account details.
The above-mentioned recommendation has been notified vide the following notification:
Notification:
The CBIC vide Notification No. 38/2023 – Central Tax dated August 04, 2022 has issued ‘the Central Goods and Services Tax (Second Amendment) Rules, 2023’ to further amend the CGST Rules in to order to align with recommendations of the 50th GST Council Meeting held on July 11, 2023.
In the said rules, in rule 21A, –
(i) for sub-rule (2A), the following sub-rule shall be substituted, namely:–
“(2A) Where,-
(a) a comparison of the returns furnished by a registered person under section 39 with the details of outward supplies furnished in FORM GSTR-1 or the details of inward supplies derived based on the details of outward supplies furnished by his suppliers in their FORM GSTR-1, or such other analysis, as may be carried out on the recommendations of the Council, show that there are significant differences or anomalies indicating contravention of the provisions of the Act or the rules made thereunder, leading to cancellation of registration of the said person, or
(b) there is a contravention of the provisions of rule 10A by the registered person, the registration of such person shall be suspended and the said person shall be intimated in FORM GST REG-31, electronically, on the common portal, or by sending a communication to his e-mail address provided at the time of registration or as amended from time to time, highlighting the said differences, anomalies or non-compliances and asking him to explain, within a period of thirty days, as to why his registration shall not be cancelled.”;
(ii) in sub-rule (4), after second proviso, the following proviso shall be inserted, namely: –
“Provided also that where the registration has been suspended under sub-rule (2A) for contravention of provisions of rule 10A and the registration has not already been cancelled by the proper officer under rule 22, the suspension of registration shall be deemed to be revoked upon compliance with the provisions of rule 10A.”
Impact of the Notification:
The Council has proposed a system-based suspension of GST registration which can hinder the continuity of business, restrict issuing of valid tax invoices and the ability to transfer credit to the recipient. The revival of GST registration for taxpayers depends on the declaration of bank account details. Once the suspension is lifted, taxpayers will be liable to ensure full compliance such as timely filing of returns, issuing proper GST documents, paying tax, and fulfilling other conditions as prescribed in the GST law.
The Notification can be accessed at: https://a2z-bucket.s3.ap-south-1.amazonaws.com/wp-content/uploads/2023/08/Notification-No.-38-2023-Central-Tax-dated-August-04-2023.pdf
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