Aadhar Authentication under GST

[Pawan Arora]

In this Article, an effort has been made to compile the relevant provisions, rules and notifications related to Aadhar Authentication under GST and its implication with effective dates. 

For Every Registered Person under GST or applied for registration upto 31.03.2020

1. Section 25 of the CGST Act

• 25. Procedure for registration.

(6A) Every registered person shall undergo authentication, or furnish proof of possession of Aadhaar number, in such form and manner and within such time as may be prescribed:

Provided that if an Aadhaar number is not assigned to the registered person, such person shall be offered alternate and viable means of identification in such manner as Government may, on the recommendations of the Council, prescribe:

Provided further that in case of failure to undergo authentication or furnish proof of possession of Aadhaar number or furnish alternate and viable means of identification, registration allotted to such person shall be deemed to be invalid and the other provisions of this Act shall apply as if such person does not have a registration.

[Section 25(6A) has been Inserted vide The Finance (No.2) Act, 2019 – effective from 01.01.2020 vide N.No. 01/2020 - CT dated 01.01.2020]

• No manner is prescribed: As on date no manner is prescribed for Aadhar Authentication of persons already registered under GST or who has already filed the application for registration upto 31.03.2020.

For New GST Registration w.e.f. 01.04.2020

2. Individual

• Section 25(6B) of CGST Act:

On and from the date of notification, every individual shall, in order to be eligible for grant of registration, undergo authentication, or furnish proof of possession of Aadhaar number, in such manner as the Government may, on the recommendations of the Council, specify in the said notification:

Provided that if an Aadhaar number is not assigned to an individual, such individual shall be offered alternate and viable means of identification in such manner as the Government may, on the recommendations of the Council, specify in the said notification.

[Section 25(6B) has been inserted vide The Finance (No.2) Act, 2019 – effective from 01.01.2020 vide N.No. 01/2020 - CT dated 01.01.2020]

• W.e.f. 01.04.2020, an individual shall undergo authentication of Aadhaar number as specified in Rule 8 of the CGST Rules, in order to be eligible for registration. [Notification No. 18/2019- Central Tax dated 23.03.2020]
• Alternate & Viable means: Provided that if Aadhaar number is not assigned to the said individual, he shall be offered alternate and viable means of identification in the manner specified in Rule 9 of the CGST Rules. [Notification No. 18/2019- Central Tax dated 23.03.2020]

3. Every person other than an individual

• Section 25(6C) of CGST Act:  

On and from the date of notification, every person, other than an individual, shall, in order to be eligible for grant of registration, undergo authentication, or furnish proof of possession of Aadhaar number of the Karta, Managing Director, whole time Director, such number of partners, Members of Managing Committee of Association, Board of Trustees, authorised representative, authorised signatory and such other class of persons, in such manner, as the Government may, on the recommendation of the Council, specify in the said notification:

Provided that where such person or class of persons have not been assigned the Aadhaar Number, such person or class of persons shall be offered alternate and viable means of identification in such manner as the Government may, on the recommendations of the Council, specify in the said notification.

[Section 25(6C) has been inserted vide The Finance (No.2) Act, 2019 – effective from 01.01.2020 vide N.No. 01/2020 - CT dated 01.01.2020]

• W.e.f. 01.04.2020, following class of persons shall undergo authentication of Aadhaar number as specified in Rule 8 of the CGST Rules, in order to be eligible for registration:

1. Authorised signatory of all types;
2. Managing and Authorised partner; and
3. Karta of an Hindu undivided family.

[Notification No. 19/2019- Central Tax dated 23.03.2020]

• Alternate & Viable means: Provided that if Aadhaar number is not assigned to the said above said persons, they shall be offered alternate and viable means of identification in the manner specified in Rule 9 of the CGST Rules. [Notification No. 19/2019- Central Tax dated 23.03.2020]

4. Exemption from Aadhar Authentication:

• Section 25(6D) of CGST Act:

The provisions of sub-section (6A) or sub-section (6B) or sub-section (6C) shall not apply to such person or class of persons or any State or Union territory or part thereof, as the Government may, on the recommendations of the Council, specify by notification.

Explanation.- For the purposes of this section, the expression "Aadhaar number" shall have the same meaning as assigned to it in clause (a) of section 2 of the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016. (18 of 2016).

[Section 25(6D) has been inserted vide The Finance (NO.2) Act, 2019 – effective from 01.01.2020 vide N.No. 01/2020 - CT dated 01.01.2020]

• Persons notified for exclusion from sub-section (6B) & (6C): Aadhar Authentication under Section 25(6B) & 25(6C) shall not apply to following persons:
  1. A person who is not a citizen of India
  2. To a class of persons, other than
     1. an individual
     2. Authorised signatory of all types;
     3. Managing and Authorised partner; and
     4. Karta of an Hindu undivided family.

[Notification No. 17/2019- Central Tax dated 23.03.2020 w.e.f. 01.04.2020]

5. New Rule 8(4A): Authentication of Aadhaar is required during submission of application of registration w.e.f. 01.04.2020.

Rule 8(4A) The applicant shall, while submitting an application under sub-rule (4), with effect from 01.04.2020, undergo authentication of Aadhaar number for grant of registration.

6. Alternate & Viable means in Rule 9 - Physical verification of business premises:

• If a person [other than those notified under section 25(6D)] fails to undergo authentication of Aadhaar number as specified in Rule 8(4A) of the CGST Rules, then the registration shall be granted to him only after physical verification of the principle place of business in the presence of the said person, not later than sixty days from the date of application.

• Deemed registration: In cases where physical verification is required under above newly inserted proviso to Rule 9(1), no deemed registration shall be considered under Rule 9(5).

[New proviso to Rule 9(1) of the CGST Rules is inserted w.e.f. 01.04.2020]

7. Substitution of New Rule 25 for Physical verification of business premises in certain cases: [Consequential amendment]

• Under the substituted rule, the proper officer apart from exercising its power of physical verification due to any reason after the grant of registration as available in erstwhile Rule 25; may also carry out the physical verification of the place of business of a person, if the person has failed to undergo Aadhaar authentication before the grant of registration. The physical verification has to be carried out in the presence of said person.

Date: 04.04.2020

Pawan Arora, Joint Partner (ALA Legal), Anubhav Gupta (Manager) and Arpit Paliwal (Associate)