TaxTMI 
TaxTMI 
Standard Operating Procedure (SOP) for Cancellation of Registration and for Repository of Non-genuine Taxpayers
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....Such ITC is availed on the inward supplies shown from non-genuine/existing taxpayers without actual 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....
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....of Standard Operating Procedure (SOP) : In view of these circumstances, it is necessary to have a standard operating procedure for- 2.1 Investigation/inspection/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, d....
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....ard Operating Procedure for cancellation of Registration 4.1 In order to ensure uniformity of procedure for cancellation of registration all Ward Incharges/Proper officer are directed to follow the following instructions :- (i) Cases where cancellation is initiated by the Proper Officer on his own motion :- Identification of entities who generate "fake 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 tr....
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....ayers were suspicious, he may direct the GSTI to conduct local enquiries to ascertain whether any such firm existed and carried out the business activities at the scale as reported in returns. • If GSTI report is negative one, then necessary action with respect to imposition of penalty may be initiated including cancellation of registration ab-initio. • Application for cancellation has to be accepted only when the dues are cleared by the taxpayers and rejection of an application needs to be followed by cancellation proceeding under section 29(2). Note : It is necessary that action on the application 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 ....
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.... 5.9 The details of the digital signature certificate (DSC)/e-sign used for uploading the compliance may be obtained from the concerned authorities or service providers so as to identify the person responsible for uploading compliances. 5.10 Deposition of taxpayer or the person who is involved in non-genuine activity shall be obtained if the taxpayer is available. Due care needs to be taken at the time of recording deposition to frame the question properly in statement so that all relevant information having evidential value is covered. 5.11 As far as possible affidavit with photo ID should be taken with the following detailed contents, wherever applicable : - Supply of goods/services and filed returns in Form GSTR - 3B 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 oth....