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Delay in GST Registration Leading to Hardship and A Parallel Economy

GST Council Meet

Goods and Service tax (GST) which was called as Good and Simple tax by PM Modi rolled out in July 2017 with a motive to clear hindrances and to end license raj by Trade Authorities. The purpose behind replacing GST with existing VAT system was simplification.

Simplification was done in getting GST registration where department was processing application for registration within 3 working days without any fees. However when lockdown was announced on 23rd March 2020 due to COVID-19, people are facing different issue with GST registrations.

Now Department is not processing application for GST registration and people have to wait for 60 days for deemed approval if no query raised by Department. Reason for such delay is not clear whether it is shortage of staff among GST department or there is any circular to go slow on GST registration, however this is causing genuine hardship to the people.
Due to lockdown many company started laying off their employee and as per Center for Monitoring Indian Economy (CMIE) report 12.2 crore people lost their job alone in April. Even employees working for decades in company were given 15 days notice to leave job. Same happened in Raymond Suiting where around 700 employees were retrenched with a very short notice.

Many People who lost their job in Covid Pandemic wants to move on and want to start own business with their savings however they are facing issue with GST registration. One require GST registration only when their turnover exceed certain Monitory Limits ( 40 lakh in Case of Goods and 20 Lakhs in case of services etc) However practically we require GST registration to open Current Account with the bank especially Proprietorship concern. Bank always ask for GST Certificate to verify Business name. Certain supplier wont give you supply if you are not having GST certificate example Havells company wont supply fans to retailers without GST as retailers have to issue GST invoice to give guarantee.
Also to start a business as a service Provider, Business require fixed assets and in case of no GST certificate one will have to forego GST Credit to which provider/supplier was eligible. Now People will talk about Revised invoice which allow supplier/Service provide to claim input within 30 Days if good purchased after application of GSTIN. however again there will be practical issue. Many vendors won’t be ready for revision of invoice citing their internal policy for example like CROMA don’t give the same day delivery for electronic items if you have GST from another state alluding their internal policy. Also revision of invoice will lead to extra efforts and resources.
One of motive behind GST was to enhance digital economy however delay in GST registration process is leading to parallel economy in form of Cash market. As banks are turning down request to open current account citing non availability of GSTIN people are forced to work on either cash or purchasing their Goods/Services quoting their Friend and Relatives GSTIN and sharing some portion of GST credit.

Govt need to escalate GST registration process as this is causing genuine hardship to the applicant and also compelling taxpayers to look at other alternatives even if its unscrupulous, amoral or illegal. So for better interest of Nation, Govt should process GST registration atleast within 1 week.


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