Circular No. F.3(479)/GST/Policy/2023/ 346 dated 01 March 2023

Key Pointers –

• Non-genuine taxpayer is the one who issues invoice under GST Act without actual supply of goods or services and taxpayer shall also include the persons who obtain registration by means of fraud, willful misstatement or suppression of facts.
• In order to ensure uniformity of procedure for cancellation of registration of Non-genuine Taxpayers, all Ward In charges/Proper officer are directed to follow the following instructions: -
• Cases where cancellation is initiated by the Proper Officer on his own motion

1. Identification of entities who generate "fake invoices". Multiple GSTIN registrations for a given address, Multiple GSTIN for a given PAN, GSTIN using incomplete or wrong addresses etc can be used to identify the generators of fake invoices.
2. The registration should be cancelled from the date of registration i.e ab-initio. Date of cancellation gets reflected in GSTR-2A of the recipient enabling the Proper Officer of the recipients to deny input tax credit on such supplies received from the cancelled taxpayer.
3. However, an opportunity of the personal hearing is to be accorded to the taxpayer before issuing an order.

• When application for cancellation is submitted by the registered taxpayer on GST portal the proper officer has to ensure that immediate action is taken on the application in order to safeguard Govt. revenue.
• In case the Proper Officer forms an opinion that the activities of the taxpayers were suspicious, he may direct the GSTI to conduct local enquiries GSTI report to ascertain whether any such firm existed and carried out the business activities at the scale as reported in returns. 
• The concerned Proper officer/ Nodal Officer during visit collects detailed Evidences as possible/applicable to establish veracity of the business of taxpayer in question. 
• After completion of inspection, verification, investigation and gathering of evidences (circumstantial or otherwise), statements, etc. If the officer reaches to the conclusion that the tax payer is non-genuine, he shall prepare a physical folder of all the direct/circumstantial evidences and immediately initiate the process of GST registration cancellation ab initio.
• The detailed report along with folder of evidences and statutory orders shall also be sent in electronic form to Business Intelligence Unit (BIU) by the Proper Officer.
• BIU shall send the list/ information of non-genuine/existing taxpayers of State to GST Council/GSTN from time to time as per the directions of the Commissioner.