GST Update No 125 on rejection of registration application for non-submission of electricity bill

In any Tax regime, grant of registration is a beneficial compliance for the government as tax revenue increases. However, it is strange that the revenue authorities are reluctant to grant registrations and tend to reject the registration application on frivolous grounds such as non-submission of documents which are not even prescribed by the Statue. Recently, similar issue was raised before the Hon’ble Allahabad High Court in case of RANJANA SINGH VS COMMISSIONER OF STATE TAX [W.P. NO. 1084 OF 2021] wherein the registration application filed by the petitioner was rejected for non-submission of electricity bill. The analysis of this decision is the subject matter of our present update. The petitioner applied for GST registration on 17.08.2021 through online mode. After carrying out an inspection of the office, the petitioner was required to furnish certain documents to the authorities. The petitioner furnished all the required documents as per the GST Act and Rules i.e. PAN Card, Adhaar Card, House Tax Receipt but their application for registration was rejected by the authorities on the ground that electricity bill was not produced. The petitioner contended that there is no requirement of submitting electricity bills for obtaining GST registration as per Section 25 of CGST Act, 2017 read with Rule 8 and 9 of CGST Rules, 2017. The Counsel of Department argued that part B of GSTR-1 contains a list of documents to be submitted which contains submission of electricity bill as well. The Court after analyzing the provisions of Section 25 of CGST Act, 2017 and Rule 8 of CGST Rules, 2017, concluded that the taxpayer needs to furnish PAN Card, Adhaar Card, House Tax receipt along with application of registration. The Court held that nowhere, there was requirement of furnishing electricity bill. The petitioner duly complied with all the provisions of the Act and the Rules. The Court further held that the contention taken by department for rejection of registration was arbitrary,illegal and baseless. It was thus held that the registration should be granted to the petitioner. A penalty was also imposed on the revenue officer for harassing the assessee. It is commonly observed that the department demands documents which are not even prescribed by the statutory provisions which lead to inconvenience to the assessee. To illustrate- revenue authorities also ask the assessee to furnish rent agreements, ESI, PF documents for verifying the employees of the assessee which has infact no relevance with respect to registration requirement under GST Law. Even for granting GST registration, which is infact a source of revenue generation to the government, various documents are demanded from the assessee time and again which are not even prescribed in the Law. This not only overburdens the assessee with unwarranted compliance and also results is wastage of valuable time of assessee and department both. Similarly, it is observed that the revenue authorities refrain from allowing revocation of cancellation of registration application which is again beneficial for revenue generation. Its high time that the officials understand that liberal approach needs to be followed in case of registration formalities.

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GST Update No 125 on rejection of registration application for non-submission of electricity bill

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