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The goods and services tax (GST) administration has lifted a ban on deemed approval for new registrations. This was imposed during the lockdown period for fear that the facility could be misused in the absence of properly functioning GST departments across the country. Several states had reported the trend of newly registered businesses being engaged in circular trading during the lockdown.
For registering as a GST business, a taxpayer has to file an application on the GST Network portal. This application is then allotted to either the central or state tax officials depending on the jurisdictions. According to the law, the official would process the application in three working days but if no action is taken, the same is deemed to be approved.
The GST policy wing issued instructions last week that all registration applications as on 30th June that have remained pending till 15th July 2020, be granted deemed approval. Further, applications received post 30th June and pending till 28th July 2020 would be deemed approved also.
The instruction also said that due to technical glitches in GSTN, few registration applications were approved even during the lockdown when the facility had been withdrawn. GSTN has been requested to forward such GSTINs who got deemed approval during the lockdown to the jurisdictional officers. In such cases, wherever required, proper officers may get the physical verification of the premises done.
A state tax official said that state’s commercial tax department had found several cases of circular trading, which involved businesses issuing fake invoices among each other to fraudulently avail input tax credit without actual supply of goods and services, with overwhelming participation from businesses registered during lockdown.