Section 95 of the Finance (No.2) Act,2019 inserted four new sub-sections viz (6A), (6B), (6C) & (6D) in section 25 of the CGST Act,2017, to make Aadhaar authentication mandatory for specified class of new taxpayers and to prescribe the manner in which certain class of registered taxpayers are required to undergo Aadhaar authentication. It is pertinent to mention here that Section 25 deals with the procedure of registration. Although the Finance (No.2) Act, 2019 was promulgated on 01-08-2019, the provisions of these for new sub-sections have been made effective from 01-01-2020 vide Notification No. 01/2020 – Central Tax, dated 01-01-2020.
Further as we know in order to make the provisions of any Section / Act operational, machinery provisions need to be in place. In this case the Rules to implement sub-section (6B),(6C) & (6D) have also been inserted in the CGST Rules, 2017, w.e.f. 01-04-2020 the relevant rules being Rule 8(4A), Rule 9(1) and Rule 25.
Thus Aadhaar Card authentication was made compulsory for new GST registration w.e.f. 01-04-2020.
Amendment in CGST Rules relating to Aadhaar Authentication
Amendment has been made in Rule 8(4A) , 9(1) , 9(2) , 9(4), 9(5) and Rule 25 of the CGST Rules in regard to Aadhaar Authentication vide Notification No. 62/2020-Central Tax dated 20.08.2020.
For ready reference and ease of understanding the comparison between the existing rule and new substituted rule is tabulated below:-
| Existing Rule of the CGST Rules, 2017 | New / Substituted Rule of the CGST Rule, 2017 and effective date |
| Sub rule (4A) to 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. | Sub rule (4A) to Rule 8 “(4A) Where an applicant, other than a person notified under sub-section (6D) of section 25, opts for authentication of Aadhaar number, he shall, while submitting the application under sub-rule (4), with effect from 21st August, 2020, undergo authentication of Aadhaar number and the date of submission of the application in such cases shall be the date of authentication of the Aadhaar number, or fifteen days from the submission of the application in Part B of FORM GST REG-01 under subrule (4), whichever is earlier.”. (effective w.e.f 01.04.2020) |
| Proviso to sub rule(1) to Rule 9 Provided that where a person, other than those notified under sub-section (6D) of section 25, fails to undergo authentication of Aadhaar number as specified in sub-rule (4A) of rule 8, then the registration shall be granted 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, in the manner provided under rule 25 and the provisions of sub-rule (5) shall not be applicable in such cases. | Proviso to sub rule(1) to Rule 9 “Provided that where a person, other than a person notified under sub-section (6D) of section 25, fails to undergo authentication of Aadhaar number as specified in sub-rule (4A) of rule 8 or does not opt for authentication of Aadhaar number, the registration shall be granted only after physical verification of the place of business in the presence of the said person, in the manner provided under rule 25: Provided further that the proper officer may, for reasons to be recorded in writing and with the approval of an officer not below the rank of Joint Commissioner, in lieu of the physical verification of the place of business, carry out the verification of such documents as he may deem fit.”; (effective w.e.f 21.08.2020) |
| New proviso inserted. | New proviso to sub-rule (2) of Rule 9 ,before the Explanation:- “Provided that where a person, other than a person notified under sub-section (6D) of section 25, fails to undergo authentication of Aadhaar number as specified in sub-rule (4A) of rule 8 or does not opt for authentication of Aadhaar number, the notice in FORM GST REG-03 may be issued not later than twenty one days from the date of submission of the application.” (effective w.e.f 21.08.2020) |
| Sub rule(4) to Rule 9: (4) Where no reply is furnished by the applicant in response to the notice issued under sub-rule (2) or where the proper officer is not satisfied with the clarification, information or documents furnished, he shall, for reasons to be recorded in writing, reject such application and inform the applicant electronically in FORM GST REG05. | Sub rule(4) to Rule 9: (4) Where no reply is furnished by the applicant in response to the notice issued under sub-rule (2) or where the proper officer is not satisfied with the clarification, information or documents furnished, he may, for reasons to be recorded in writing, reject such application and inform the applicant electronically in FORM GST REG05. (effective w.e.f 21.08.2020) |
| Sub rule(5) to Rule 9: (5) If the proper officer fails to take any action, – (a) within a period of three working days from the date of submission of the application; or (b) within a period of seven working days from the date of the receipt of the clarification, information or documents furnished by the applicant under sub-rule (2),the application for grant of registration shall be deemed to have been approved. | Sub rule(5) to Rule 9: “(5) If the proper officer fails to take any action, – (a) within a period of three working days from the date of submission of the application in cases where a person successfully undergoes authentication of Aadhaar number or is notified under subsection (6D) of section 25; or (b) within the time period prescribed under the proviso to sub-rule (2), in cases where a person, other than a person notified under sub- section (6D) of section 25, fails to undergo authentication of Aadhaar number as specified in sub-rule (4A) of rule 8; or (c) within a period of twenty one days from the date of submission of the application in cases where a person does not opt for authentication of Aadhaar number; or (d) within a period of seven working days from the date of the receipt of the clarification, information or documents furnished by the applicant under sub-rule (2), the application for grant of registration shall be deemed to have been approved.”. (effective w.e.f 21.08.2020) |
| Rule 25: Physical verification of business premises in certain cases. Where the proper officer is satisfied that the physical verification of the place of business of a person is required due to failure of Aadhaar authentication before the grant of registration, or due to any other reason after the grant of registration, he may get such verification of the place of business, in the presence of the said person, done and the verification report along with the other documents, including photographs, shall be uploaded in FORM GST REG30 on the common portal within a period of fifteen working days following the date of such verification. | Rule 25: Physical verification of business premises in certain cases. Where the proper officer is satisfied that the physical verification of the place of business of a person is required due to failure of Aadhaar authentication or due to not opting for Aadhaar authentication before the grant of registration, or due to any other reason after the grant of registration, he may get such verification of the place of business, in the presence of the said person, done and the verification report along with the other documents, including photographs, shall be uploaded in FORM GST REG30 on the common portal within a period of fifteen working days following the date of such verification. (effective w.e.f 21.08.2020) |
Analysis of amendments relating to Aadhaar Authentication:
Sub rule (4A) to Rule 8
The earlier simple stated that the applicant while making application he needs to undergo authentication of Aadhaar number for grant of registration. Now the rule has been made comprehensive with following additions that too with retrospective effect from 01.04.2020.
i) Specific mention that authentication of Aadhar Number is not required for a person notified under sub-section (6D) of section 25.
It may be noted here that vide Notification No. 17/2020 – Central Tax dated 23rd March,2020 it has been notified that requirement of Aadhaar authentication in respect of new registrations shall not apply to a person who is not a citizen of India or to a class of persons other than the following class of persons, namely (a) Individual; (b) authorised signatory of all types; (c) Managing and Authorised partner; and (d) Karta of an HUF.
ii) Specific mandation that date of submission of the application shall be the date of authentication of the Aadhaar number, or fifteen days from the submission of the application in Part B of FORM GST REG-01 under sub rule (4), whichever is earlier.
This means that if authentication of Aadhaar Number does not take place within 15 days then also, registration application will be deemed to be filed. By this amendment the proper officer has been granted additional 15 days for grant of registration as time period given for deemed registration starts from date of application.
Proviso to sub rule(1) to Rule 9
The amendment basically devolves an option to the applicant to not opt for authentication of the Aadhaar number and in such cases physical verification will be conducted of the place of business and registration shall be granted thereafter. It may be noted here that corollary amendment has also been made in Rule 25 which is discussed in suceeding paras.
Further proviso has also been inserted in said sub rule according to which if Joint Commissioner permits, in lieu of the physical verification of the place of business,the proper officer can carry out the verification of such documents as he may deem fit.
The amendment is effective from 21.08.2020.
New proviso to sub-rule (2) of Rule 9
This newly inserted proviso mandates that in case a person fails to undergo authentication of Aadhaar number or does not opt for authentication of Aadhaar number, the notice in FORM GST REG-03 may be issued not later than 21 days from the date of submission of the application.
It may be noted here that in FORM GST REG-03 notice is sent by the proper officer to the applicant for seeking additional information/ clarification / documents relating to application for registration. With insertion of above proviso it has become mandatory for proper officer to send notice in case a person fails to undergo authentication of Aadhaar number or does not opt for authentication of Aadhaar number, within 21 days from date of submission of application for registration.
As per amended rule 9(5), in consonance to above provision it has been prescribed that in case no action is taken by proper officer within 21 days from date of application , the registration will be deemed to be granted. However it is important to note that above amendments will be effective from 21.08.2020.
Sub rule(4) to Rule 9:
As per said sub rule the proper officer shall reject the application for registration where no reply is furnished by the applicant in response to the notice or where the proper officer is not satisfied with the clarification, information or documents furnished. As the word shall was used the proper officer had no discretion in this regard and had to reject the application if above situation arises.
However now in order to empower proper officer with some discretion in this regard the word “shall’ has been replaced with word “may w.e.f 21.08.2020.
Sub rule(5) to Rule 9:
The sub rule is in regard to deemed registration. It has now additionally been prescribed that registration shall be deemed to be granted in following cases where the proper officer fails to taken any action within 21 days from the date of submission of the application:-
i) where the applicant fails to undergo authentication of Aadhaar number.
ii) where the applicant does not opt for authentication of Aadhaar number.
It may be noted here that despite deemed registration the tax payer cannot practically start or carry its operations until registration is actually granted and GSTIN is issued.
The amendment is effective from 21.08.2020.
Rule 25: Physical verification of business premises in certain cases.
The amendment to this Rule effective from 21.08.2020 is significant as same provides an option to the applicant to not to undergo Aadhaar authentication and in such cases the proper officer shall carry out physical verification of the place of business. Earlier such physical verification was required only in cases where there is failure of Aadhaar authentication.
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Frah Saeed is a law graduate specializing in the core field of indirect taxes and is the Co-founder of taxwallah.com. She has authored many publications on GST and is into full-time consultancy on GST to big corporates. She as a part of taxwallah.com heads a team comprising of Chartered Accountants and Advocates and plays a key role in our mission to disseminate GST knowledge to all.
