GST registration after the 57th Council: FAQs on amendment, cancellation and rule 14B

The FAQs issued on the recommendations of the GST Council’s 57th meeting set out changes to GST registration in some detail: what an applicant must file, which amendments the system will accept without an officer, when cancellation will go through automatically, and a new optional route for small sellers on e-commerce platforms. What follows takes them in order, ending with the scheme for e-commerce sellers under rule 14B of the CGST Rules, 2017.

The FAQs describe changes that are still to be made. They say that section 29 “is being amended” and that FORM GST REG-01 “shall be suitably amended”, and leave several points to a circular. No effective date is given for any of the registration changes, so the present rules continue to apply until the notifications and circular issue.

The registration application

Three things are promised for a new application. A circular is to specify the information and documents required, so that applicants can keep them ready before filing. It is to carry a consolidated list of documents accepted as proof of the Principal Place of Business (PPoB) and Additional Place of Business (APoB) in different situations, and FORM GST REG-01 is to be amended to match. The portal will then show only the documents relevant to the type of premises selected, so owned and rented premises will each bring up their own list.

The FAQs also deal with requests for further documents:

No additional documents are required to be uploaded or sought by the officer in respect of the GST registration application. The same shall be clarified through a circular.

Once the circular issues, an applicant who has uploaded the documents listed for the type of premises has a stated basis to resist a request for more.

Amendments the system will accept on its own

Amendments to the legal name, the constitution of the business and an APoB were until now core amendments and needed an officer’s approval. They are to become non-core amendments, processed automatically by the system.

• Legal name: an application in FORM GST REG-14, and the system amends the name once the PAN details are validated.
• Additional place of business: FORM GST REG-14 with the proof of premises from the list attached to FORM GST REG-01. The system adds the APoB, and a second APoB need not wait for the first to be approved.
• PPoB under rule 14A: for a registration obtained under rule 14A, a change of PPoB also becomes non-core and is processed by the system.

For every other registration, a change of PPoB remains a core amendment. For a normal taxpayer registered under rule 9, the FAQs set out the timeline. The application in FORM GST REG-14, with proof of the new premises, is to be approved by the proper officer within 15 days of the application where there is no discrepancy. Where there is one, the officer is to issue a show cause notice within the same 15 days. The applicant then has 7 working days from the notice to reply, and the officer 7 working days from the reply to act.

A business moving premises should have the proof of premises from the prescribed list ready on the day it files, since a notice leaves little time to obtain them.

Cancellation on the taxpayer’s application

The FAQs list four situations in which cancellation can be sought: the business is discontinued, closed or fully transferred; the constitution changes and a new PAN results; the business is amalgamated, demerged or disposed of; or the person is no longer liable to be registered. The application in FORM GST REG-16 is to be filed within 30 days of the event, with no time limit on the death of a sole proprietor.

Automatic acceptance depends on three conditions being met on the date of the application:

1. every return due on or before that date has been filed;
2. any tax, interest or penalty due has been paid, unless stayed by a court, Tribunal or Appellate Authority;
3. where outward supplies of a tax period have been reported in FORM GSTR-1 or the IFF, FORM GSTR-3B for that period has been filed.

The route then turns on the input tax credit passed on. A taxpayer who has never passed on ITC above ₹ 2.5 lakh in any month since registration has the application accepted by the system, with the order communicated in FORM GST REG-38. Where ITC above ₹ 2.5 lakh has been passed on in any month, phase 1 needs the final return in FORM GSTR-10 filed along with FORM GST REG-16 for the system to process it; in phase 2 the application alone will do.

The third condition is the easiest to miss. A GSTR-1 filed for a closing month without the matching GSTR-3B blocks automatic acceptance, so both returns for the last tax period need to be filed before the application goes in.

Suspension, system cancellation and revocation

Where the system has suspended a registration for non-filing of returns for six consecutive months, or for not furnishing bank account details under rule 10A, section 29 is to be amended so that the system itself cancels the registration, without an officer. Revocation is to be system-based too: once the default is made good and an application for revocation is filed in FORM GST REG-21 within 180 days of the date of cancellation.

A suspended taxpayer should clear the returns or bank details first, so that the revocation application meets the condition when filed within the 180 days.

Grounds an officer may no longer use

The Council recommended omitting four grounds for cancellation from rule 21 of the CGST Rules, 2017:

• availing input tax credit in violation of section 16 of the Act or the rules under it;
• violation of section 171 (anti-profiteering);
• violation of rule 86B;
• outward supplies reported in FORM GSTR-1/1A for one or more tax periods exceeding those declared in FORM GSTR-3B.

Once rule 21 is amended, an alleged breach of section 16 in availing ITC, or a GSTR-1 figure above GSTR-3B, will no longer by itself be a ground under that rule for an officer to cancel the registration. Until the amendment is notified, the existing grounds remain in the rule.

Rule 14B: registering at an e-commerce operator’s warehouse

The optional scheme lets a seller of goods through an electronic commerce operator (ECO) declare the ECO’s warehouse as its PPoB in a State or Union territory where it has no physical presence.

The conditions in the FAQs are these:

• supplies of goods only through ECOs required to collect tax at source under section 52 of the CGST Act, 2017, so the registration cannot be used for any other supply;
• output tax on supplies to registered persons, other than those on the same PAN, not exceeding ₹ 2.5 lakh a month;
• the ECO’s consent to its warehouse being declared as the PPoB;
• a regular registration in the home State, other than under this scheme or rule 14A, whose GSTIN is declared in the application.

The application is in FORM GST REG-01, opting for rule 14B. It goes first to the ECO, which has 7 working days to give consent; without consent the application is deemed rejected. It then goes to the jurisdictional officer in the home State for biometric Aadhaar authentication, verification of original documents and physical verification of the home PPoB, where that has not already been done. Only one such registration can be held against a PAN in a State or Union territory.

After registration, the books of account are kept at the PPoB in the home State for every rule 14B registration on that PAN, and produced when the proper officer of the other State asks for them. The certificate and GSTIN need not be displayed at the ECO’s warehouse. If the ECO withdraws consent, the seller has 30 days from the ECO’s intimation to file FORM GST REG-14 changing the PPoB or APoB; otherwise the registration is deemed cancelled, as it also is if the home-State registration is cancelled. Withdrawal from the scheme is by FORM GST REG-32.

A seller registered under rule 14A in the home State must first withdraw from it in FORM GST REG-32 before applying.

This article is intended for educational purposes only and should not be construed as professional advice. It is based on the law as understood on the date of publication; laws and regulations are subject to change, and it may not reflect later developments. Readers are advised to consult a qualified tax professional on their specific situation before taking any action based on it. CA. Mohit Gaba takes no responsibility for any action taken or decision made on the basis of this article.