GST: physical verification of premises is now mandatory

Aim is to check fake invoice fraud, says Council Secretariat

CHENNAI, TAMIL NADU, 01/02/2018: Under the new Goods and Services Tax (GST) regime, all consignments worth over Rs 50,000 moving over 10 km from their origin will require prior registration and generation of an e-way bill through the GST Network. This system, aimed at helping authorities keep track of all taxable goods and detect potential tax evasion, will kick in for inter-State sales across the country from today February 1. Workers seem loading goods onto a lorry at Salt Quarters in Chennai on Thursday. Photo: B. Jothi Ramalingam

The government has introduced mandatory physical verification of business premises for the purposes of obtaining GST registration.

The GST Council Secretariat said that the move, aimed at controlling the menace of GST fake invoice frauds, was recommended by the Council’s law committee.

“Now there must be in-person verification before registration is granted to an applicant. Further, in case an applicant opts for Aadhaar authentication, he will undergo biometric-based Aadhaar authentication at one of the facilitation Centres notified by the Commissioner,” the secretariat said in a statement.

‘Pay 1% in cash’

The GST Council’s law committee had mooted controlling new registrations taken by applicants without business purpose and the measures notified to tighten the process will impact the menace of mushrooming fake firms and input tax credit (ITC) fraud by fly-by-night operators, the secretariat said in a statement. Separately, a new rule has been introduced by the Central Board of Indirect Taxes and Customs that mandates businesses with monthly turnover of over ₹50 lakh to pay at least 1% of their GST liability in cash instead of using input tax credits to discharge their entire liability.

The validity of e-way bills has also been tweaked, doubling the distance to be covered for each day of validity, effective January 1.

Till now, an e-way bill for transporting goods under GST allowed transporters to cover 100 km in one day. Now, that distance for each day of validity has been increased to 200 km.

“While four days were granted in terms of e-way bill validity to cover 400 km, going forward, only two days will be granted for the same distance,” explained Abhishek Jain, tax partner at EY.

Over the past month, a nationwide drive against fake GST invoices has led to the arrest of 164 fraudsters, including five chartered accountants, and 1768 cases being filed against 5,745 GSTIN entities, the secretariat said in a statement.