Challenges Faced by Genuine Online Sellers in Current GSTIN Drive, Recommendations to Mitigate Issues

The ongoing nationwide drive initiated by Central and State Tax administrations to identify and eliminate fraudulent GSTINs is posing difficulties for legitimate online sellers. Unlike previous drives, the jurisdictional officers now have the authority to not only verify but also suspend licenses during this campaign. 

While the government allows businesses to register for GST using a virtual place of business (VPOB) address, provided the virtual office provider is registered and approved by the government, it has been observed that GST officers are demanding physical records and the presence of employees and/or directors for verification. This approach can have adverse consequences for genuine small sellers who typically register their businesses at their chartered accountant's premises or in cost-effective co-working spaces to ensure compliance and cost efficiency.

Vinod Kumar, President, India SME Forum, and Trustee and President, FIRST India, said “In the current global economic slowdown scenario, the small sellers should be encouraged to utilize the provisions made by the government to grow their businesses. By expecting the small sellers to adopt a traditional office set up or have specific demarcation for goods in the warehouses can result in unfair cancellation of their GST licenses even though they are compliant to the law. It is crucial to ensure that tax officers at the ground level are familiar with the existing provisions, circulars, FAQs, judicial precedents, and other relevant information during this special drive to facilitate a successful and hassle-free process.”

While combating fake registrations is vital, it is equally important to acknowledge the specific challenges faced by small sellers who conduct business through online channels. The business model of e-commerce sellers and the associated registration complexities are nuanced. These sellers heavily rely on e-commerce operators (ECOs) for various services, and their circumstances should be duly considered throughout the drive. Due importance should be given to safety and legal provisions such as bank account validation, Aadhaar authentication, clarifications, and rulings.