Having rationalised rates, the GST Council has now moved to reforming processes. Examine how system-based registration and cancellation can improve compliance while protecting revenue.

The 56th GST Council meeting cut GST to two main slabs of 5% and 18%, with a 40% demerit rate on luxury and sin goods [2]. The 57th meeting (8 October 2026) then turned to processes: registration, returns, refund and adjudication [1]. Rule-based portal decisions can replace officer discretion and widen compliance, but only if data checks protect revenue.

How system-based processes improve compliance

• Faster entry: Rule 14A gives automatic registration to applicants passing on input tax credit (ITC) of ≤ ₹2.5 lakh a month. A simpler route for small e-commerce sellers brings MSMEs into the formal net [1].
• Real-time amendments: Rule 19 accepts changes automatically, except a change of Principal Place of Business. Drop boxes in REG-01 and FAQs cut queries and rejections [1].
• Less discretion: fewer officer touchpoints reduce rent-seeking and compliance costs.
• Self-correcting cancellation: the new Rule 23A cancels registrations when returns or bank details are missing. It revokes the cancellation automatically once the trader complies, so it nudges rather than punishes [1].

Risks to revenue

• Fraud begins at registration: a drive started in May 2023 found 29,273 bogus firms with suspected ITC evasion of ₹44,015 crore [3].
• Per-firm limits can be gamed: one syndicate ran 569 fake firms across 14 States to claim ₹1,047 crore of ITC [4]. Each firm could stay below the Rule 14A limit.
• Unchecked address changes: Rule 14A firms can change their place of business automatically, so shell firms can relocate without scrutiny [1].
• Honest small traders who miss returns may be cancelled automatically, which puts their buyers' ITC at risk.

Safeguards to protect revenue

• Network analytics: the portal should flag a PAN, mobile number, address or bank account shared across many firms.
• Phase-in based on evidence: move from Phase 1 (conditional automatic acceptance) to Phase 2 (full automatic acceptance) only after auditing error rates [1].
• Regular special drives to check firms after registration [3].
• SMS and email alerts before cancellation.
• Centre–State coordination: Mohit Minerals (2022) held that Council recommendations do not bind legislatures [5]. Changes to the CGST Act therefore need matching State laws on an agreed timeline. The Council's ¾ weighted-vote design helps build that consensus [6].

System-based registration and cancellation replace officer gatekeeping with data-driven checks after entry. Combined with network risk-profiling and matching Centre–State amendments, they can lower compliance costs while stopping fake-ITC leakage. This advances a simpler GST in the spirit of cooperative federalism under Article 279A.