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TMI BlogStandard Operating Procedure (SOP) for Cancellation of Registration and for Repository of Non-genuine TaxpayersX X X X Extracts X X X X X X X X Extracts X X X X ..... tual supply of goods and services. 1.3 Non-genuine taxpayer is the one who issues invoice under GST Act without actual supply of goods or services to pass on inadmissible tax credit of ITC to the claimant. Non- genuine taxpayer shall also include the persons who obtain registration by means of fraud, wilful misstatement or suppression of facts and for the fraudulent purpose like claim of bogus refunds or generation of e-way bills for suppressed supplies of other taxpayer, but they themselves are not engaged in genuine business activity. 1.4 Several cases of monetisation of credit fraudulently obtained or ineligible credit through refund have been detected in the past. On Verification, several taxpayers were found to be non-existent in a number of cases. In all these cases it has been found that the Input Tax credit (ITC) was taken by the taxpayer on the basis of fake invoices and the tax liability was paid using such ITC. 1.5 Further, it has been reported that reference regarding fake dealer/ suspicious transactions are received from various sources such as CGST, DGGI, DGARM, Other States, Economic Offence Wing (EOW) etc. which shows involvement of the concerned taxpayers. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pection/verification for identification of non-genuine/existing taxpayers. 2.2 Creation of a 'Repository' of non-genuine taxpayers which will contain list of non-genuine/existing taxpayers along with necessary supportive and corroborative evidences. 2.3 Use of information and 'evidences' of non-genuine/existing taxpayers in the process of adjudication/audit/assessment or other legal actions of cases of recipients of ITC claim on the basis of fake invoices. 2.4 'Exchange' of information of non-genuine taxpayers and evidences thereof with other authorities such as other State Governments and Central authorities 3. Relevant Legal Provisions 3.1 Section 29 of the GST Act, read with rule 20 of the Goods and Services Tax Rules provides that a taxpayer can apply for cancellation of registration in Form GST REG-16 in the following circumstances: a. Discontinuance of business or closure of business ; b. Transfer of business on account of amalgamation, merger, de-merger, sale, lease or otherwise ; c. Change in Constitution of business leading to change in PAN ; d. Taxable person (including those who have taken voluntary registration) is no longer liable to be registered und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ke invoices" is the first step in curbing this menace. This method also involves identification of generators and users. To identify the generators of fake invoices the following risk parameters can be used. (a) Multiple GSTIN registrations for a given address (b) Multiple GSTIN for a given PAN (c) GSTIN using incomplete or wrong addresses (d) Tax payer using sensitive commodities. (e) Common e-mail, common mobile numbers, common address, common authorized signatories, common promoters for multiple GSTIN. (f) Mismatch between the premises declared and the volume of goods transacted. (g) Mismatch between the quantum or transactions and the e-way bills generated. If there are, no e-way bills or less e-way bills generated compared to the details of transactions as per the GST returns. (h) PAN involved in any "fake invoice" fraud or any other GST frauds appear as either in GSTR IA or GSTR 2A. (i) Abnormal ITC utilization (for example above 95%). Where cancellation proceeding are initiated by the Proper Officer on above grounds, the registration should be cancelled from the date of registration i. e ab-initio. This gives an upper hand to the Revenue as all the activi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on to be taken within 30 days. (E) Details of authorized signatory/GSTP/CA/Advocate, etc. In his/her registration details shall be taken on record for future correspondence. 4.2 The order issued by the Proper Officer should be speaking one containing details of the case and reasons of rejection of plea taken by the registered taxpayer. 4.3 The cancellation of registration shall not affect the liability of the person to pay tax and other dues for any period prior to the date of cancellation whether or not such tax and other dues are determined before or after the date of cancellation. 4.4 The taxpayer whose registration has been cancelled is required to furnish GSTR-10 within 03 months of cancellation or date of order of cancellation whichever is later. The proper officer must ensure compliance in this regard. 5. Evidences collected during Investigation/Inspections/Verification : The concerned Proper officer/Nodal Officer during visit collects detailed Evidences as possible/applicable to establish veracity of the business of taxpayer in question. An illustrative check list of all such evidences to be taken on record is given below :-- 5.1 Photograph of the place of bus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B by reporting such fake outward supplies and used wrong ITC to discharge liability of such outward tax. - The Taxpayer is engaged in issuance of fake Tax invoices without actual Supply of goods/services and also received such fake tax invoices without receipt of any goods and filed returns in Form GSTR-3B by reporting such fake outward supplies and used wrong ITC upon the strength of such fake tax invoices received and other related documents. - The person in whose name the GST registration has been obtained in his name and he was not involved in it. Thus he had not done any actual business of supply of goods or services. - The taxpayer registration has been obtained by somebody else under pretext of job offer or otherwise and credentials in this behalf are with such person. Such person had indulged in issuance of fake tax invoices and generation of e-way bills in the name of person of no means. - Any such other scenario found by the investigation/ proper officer. 6. Preparation of Evidence folders and sharing of folders: Actions to be taken after visits 6.1 After completion of inspection, verification, investigation and gathering of evidences (circumstantial or otherw ..... X X X X Extracts X X X X X X X X Extracts X X X X
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