Aadhaar Authentication and Physical Verification of premises

The Finance (No. 2) Act, 2019 introduced sub-sections (6A), (6B), (6C) and (6D) to section 25 of the Central Goods and Services Tax Act, 2017 (CGST Act) which deals with the procedure for registration. The said sub-sections were made applicable from 1^st January 2020 vide Notification No. 01/2020 – Central Tax dated 1^st January 2020.

In this regard, rules have been inserted in the Central Goods and Services Tax Rules, 2017 (CGST Rules) and provisions of Section 25(6B), Section 25(6C) and Section 25(6D) have been notified vide Notification No. 16/2020, 17/2020, 18/2020 and 19/2020 – Central Tax dated 23^rd March 2020.

Cases where Aadhaar authentication is mandatory

In terms of the said sub-sections read with the notifications, Aadhaar authentication is mandatory for the following class of persons:

Physical verification where Aadhaar authentication cannot be done

In Rule 9 – Verification of the application and approval, sub-rule (1) is added which provides that, where a person fails to undergo Aadhaar Authentication, then registration will be granted only after physical verification of the principal place of business. Such verification is to be done within 60 days from the date of application.

Rule 25 that deals with Physical verification of business premises is substituted to provide that physical verification is to be carried out by the proper officer, before grant of registration, or due to any reason, after the grant of registration. Such verification will be done in the presence of the person (who has applied for or who has been granted registration). Within 15 days of such verification, the proper officer is required to submit a report along with other documents, including photographs in FORM GST REG-30.

Earlier physical verification of business premises provided for verification only after registration, now the rule has been substituted to provide for verification before registration as well.

Cases where Aadhaar verification will not apply

The following class of persons to whom provisions of Aadhaar authentication shall not apply have been notified under section 25(6D) vide Notification No. 17/2020 – Central Tax with effect from 1^st April 2020:

Person who is not a citizen of India
Class of persons other than individual, authorised signatory of all types, managing and authorised partner and Karta of HUF

Deemed registration under Rule 9(5) not applicable where Aadhaar authentication not done

Under Rule 9(5) of the CGST Rules, deemed registration is granted if proper officer fails to take action within 3 working days from date of submission of the application or within 7 working days from the date of receipt of clarification sought by the officer, information or documents furnished by the applicant.

However, where Aadhaar authentication cannot be done and physical verification is to be carried out by the proper officer, provisions of deemed registration under Rule 9(5) will not apply.