GST encourages established enterprises to do business only with GST-registered entities so that the input tax credit chain is not broken. (iStockphoto)

New Delhi: The Centre's indirect tax administration has asked top field officers to make sure that GST registration process remains smooth and efforts to check fake registrations do not lead to burdensome compliance requirements for businesses.

A fresh set of instructions has been issued to address difficulties faced by applicants during the goods and services tax registration process, mainly on account of queries from officers seeking additional documents, the Central Board of Indirect Taxes and Customs (CBIC) said in a statement on Friday. These instructions will reduce the compliance burden on taxpayers and facilitate transparency, the CBIC said.

The instructions issued on Thursday mandate that officers have to strictly adhere to the prescribed list of documents provided in the registration application form. The documents to be uploaded in specific circumstances have been listed in the instructions, the CBIC said.

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"Officers have been directed not to issue notices based on presumptive grounds, minor discrepancies, or for additional documents that are not essential for processing applications," said the tax authority's statement. "Officers have been also directed to seek approval of the concerned Deputy/Assistant Commissioner in cases where documents apart from the listed documents is required to be sought."

The CBIC also asked its senior field officers to closely monitor the processing of applications, physical verifications and the nature of queries raised. Officers have also been advised to issue suitable trade notices, wherever required.

"It has also been advised that strict action should be taken against officers deviating from these instructions," the CBIC said. "This will further facilitate the process of getting GST registration, ease compliance burden, and promote the ease of doing business."

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Officers have also been asked to post sufficient staff for handling registration applications to ensure timely disposal.

"While on one hand, there is a need to prevent registration of fraudulent firms created for passing on input tax credit (ITC) without any underlying supply (of goods or service), on the other hand, there is a need to ensure that genuine applicants seeking registration are not unduly harassed," the CBIC said.

The indirect tax system rolled out in 2017 is heavily technology-driven and has robust transparency and disclosure requirements at different stages in the supply chain. While the tax system is conceptually sound and benefits large corporations with the resources to meet its requirements, it has posed several implementation challenges given the large informal sector of the economy.

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GST encourages established enterprises to do business only with GST-registered entities so that the input tax credit chain is not broken, which is not always possible given the large informal sector of the economy.