Combatting fraud. GST registration in Andhra Pradesh now requires biometric Aadhaar authentication to deter fraudulent entries

Applicants for GST registration in Andhra Pradesh now have to go for biometric-based Aadhaar authentication based on risk profile. Such a move aims to curb fraud registrants. 

Earlier this provision was meant for Gujarat and Puducherry. Now, the Finance Ministry has notified the changes in GST Rules to include Andhra Pradesh in the list. A decision to tighten the registration process was taken in the GST Council meeting l on December 17, 2022. It was recommended that a pilot be conducted in Gujarat for Biometric-based Aadhaar authentication and risk-based physical verification of registration applicants. An amendment in rule 8 and rule 9 of CGST Rules, 2017 will facilitate the same. The Council said this will help tackle the menace of fake and fraudulent registrations.

Rule 8 deals with the application procedure for registration. Based on the recommendation of the GST Council, a sub-rule (4A). This prescribes biometric-based Aadhaar authentication and taking photographs of the applicant in case the applicant has opted to authenticate an Aadhaar number and is identified on the common portal based on data analysis and risk parameters. Rule 9 is related to verification of the application and approval.

Earlier, in June this year, CBIC came out with detailed guidelines for GST registration and made them more stringent with a focus on ‘High Risk’ applicants.  Under this, once the application is received, the officer shall initiate the process of scrutiny and verification of the details filled and the documents uploaded by the applicant. The officer will also examine the documents’ authenticity as proof of address.

As the process of categorising applicants into three categories — low, medium and high — is already being implemented by the Directorate General of Analytics and Risk Management (DGARM) and GSTN, the officer will check the risk rating while verifying and processing the said application. “Special attention needs to be paid to the cases where “High” risk rating has been assigned,” the instruction said.

Special attention will be paid to cases where any registration obtained on the PAN of the applicant has been cancelled previously or suspended at the time of the new application. The officer will also see whether any application for registration on the PAN of the applicant has been rejected previously, whether the applicant’’s place of business appears risky based on the local risk parameters, and whether the proof of address of business seems suspicious/doubtful.

While the physical verification of the place of business will be a must in the case of Aadhaar authentication, it can also be initiated in other cases.

CBIC noted various modus operandi of obtaining fake registrations, such as misusing identities of other persons like PAN, Aadhaar, etc. In some cases, forged identities have been created by using the same photo of a person on different Aadhaar cards under different names. In one of the cases detected recently, it has been found that a few fraudsters have obtained fake GST registrations on the basis of PAN and Aadhaar numbers of persons from economically weaker sections by fraudulently modifying the phone numbers  on the Aadhaar cards of these persons by taking these persons to the Aadhaar Seva.

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