Not filing Goods and Services Tax (GST) returns on time could cost businesses their assets as well as their tax registration, according to a set of instructions the government has issued to field officers, aimed at forcing compliance.

The standard operating procedures issued by the finance ministry instructs field officers to provisionally attach the assets of registered GST assesses, including bank accounts, in cases they think it is needed to protect revenue interests of central and state authorities. Such attachment will be resorted to in cases where businesses do not file returns even after they receive a notice asking them to do so in 15 days. Officers will also proceed to assess tax liability of the business on their best judgement based on available information.

The instructions issued on Tuesday also authorise field officers to cancel the GST registrations as allowed in the indirect tax law. Central GST Act allows cancellation of GST registration if businesses do not file returns for specified periods.

“In deserving cases, based on the facts of the case, the Commissioner may resort to provisional attachment to protect revenue…," said the instructions. The move comes at a time when revenue collections and tax return filings remain way below expected levels. Against the total GST registrations of 12.2 million as of June 2019, only 7.8 million filed their returns for October, as per official data.

The efforts to improve compliance comes after the authorities remained lenient towards lapses in the initial two years of GST roll out to help businesses and traders migrate to the new indirect tax system. Central and state governments last week decided not to go ahead with any tax rate increase in spite of revenue shortfall and flaws in the GST structure caused by tax cuts in the past as a rate increase could discourage consumption when the economy is going through a slowdown.