Kerala to Conduct Second Level Verification of New GST Registrations

The Kerala State Goods and Service Tax (GST) issued circular authorising the enforcement squads to conduct physical verification of the place of business of new GST registration under both the state GST department and Central GST department. This is called as second-level verification apart from the first level document verification in the GST portal.

The Commissioner of State Tax, Kerala, has already issued directions to the concerned authorities regarding measures to be taken to prevent evasion of tax through Bogus and Benami GST registration. Even after issuing such instructions, it has been noticed that bogus and Benami registrations are reported in the state.

The department said that this is very critical especially in the case of evasion prone goods such as lottery, flooring material, Iron and Steel, hill produce, grass timber, plywood, areca nut, cardamom, etc.

Now, the department issued a circular stating strict instructions to the Registering Authority to conduct site visits and detailed verification of application. Also, the commissioner pointed out that the registered person may disappear either by not filing returns or by filing returns with bogus credits after conducting business in large volume for two or three months. In some cases, these registrations are used for making supplies and tax credit through circular trade.

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The circular clearly states that the Registering Authority has the primary liability as far as the registration is concerned and they shall adhere to the instructions outlined. The verification will be done for the State GST jurisdiction as follows:

1. Once the registration is granted, the details will be available in the GST portal.
2. The Deputy Commissioner (Intelligence) of the concerned jurisdictional district shall collect the details from the GST backend.
3. He has to distribute it to Enforcement squads for verification.
4. The squads should conduct a detailed enquiry for the new registrations, and they should pay special attention evasion on prone commodities mentioned above.
5. Applicant background will also be checked and should be confirmed that the applicant is genuine and not Benami.
6. The squads should furnish their report with recommendations within seven days of the receipt of details to the registering authority keeping a copy to Deputy Commissioner (Intelligence) and the concerned deputy joint commissioner.
7. The Deputy Commissioner (Intelligence) shall extract data preferably daily or at least once through MIS reports.

The circular states that some of the new cases under Central GST jurisdiction are also vulnerable. To prevent this, the circular clarifies about physical verification for the registrations which fall under Central GST jurisdictions. The enforcement squads can conduct an audit of the place of business of such new registration under Central GST jurisdiction.

The verification will be done as follows:

1. The GST info team will provide district wise new registration details under Central jurisdiction to Joint Commissioners (Intelligence).
2. On receipt of details from the Joint Commissioner (Intelligence), Deputy Commissioners (Intelligence) shall do the same work as done in the case of new registrations under State GST jurisdiction.
3. The Deputy Commissioners (Intelligence) of State GST should forward the enquiry report of such cases with the recommendations to the concerned Deputy Commissioners of Central GST Department.

For any clarifications/feedback on the topic, please contact the writer at dvsr.anjaneyulu@cleartax.in