Tax authorities plan to begin a special two-month crackdown on fraudulent GST registrations starting on August 16, as announced by the Central Board of Indirect Taxes and Customs (CBIC).
A previous drive in May last year uncovered nearly 22,000 fake registrations, which were linked to an estimated GST evasion of over Rs 24,000 crore. In response, the National Coordination Committee, consisting of senior Central and state tax officials, has decided to launch a second special campaign in order to purify the tax system.
During this initiative, GST Network will work with the Directorate General of Analytics and Risk Management (DGARM), CBIC, to pinpoint suspicious or high-risk GST identification numbers (GSTINs) using advanced data analytics and risk criteria. Once identified, this information will be shared with the appropriate tax officer for further examination.
Center and State GST officers will then carry out a prompt scrutiny of the identified suspicious GSTINs. If it is confirmed that a GSTIN is fraudulent or non-existent, the tax officer will take steps to suspend and cancel the registration and block input tax credit (ITC).
"The second Special All-India Drive may be launched by all Central and State Tax administrations from 16th August 2024 to 15th October 2024 to detect suspicious/ fake GSTINs and to conduct requisite verification and further remedial action to weed out these fake billers from the GST eco-system and to safeguard government revenue," the CBIC said in an instruction to field formations.
Entities are engaging in fraudulent activities under GST by obtaining fake registration in order to illegitimately claim Input Tax Credit (ITC) through the use of counterfeit invoices.
The Central Board of Indirect Taxes and Customs (CBIC) has instructed field offices to identify the individuals or organisations responsible for these fake GST Identification Numbers (GSTIN) and take further action as necessary, including recovering government dues as well as provisionally attaching properties or bank accounts.
During the verification and investigation process, tax officers are required to report any new methods of operation they uncover.
The GST Council Secretariat will compile the unique methods uncovered during this special campaign and share them with tax administrations at both the central and state levels across the country.
The first phase of the campaign, conducted between May 16, 2023, and July 15, 2023, revealed that a total of 21,791 entities (11,392 falling under state tax jurisdiction and 10,399 under CBIC jurisdiction) with GST registration were non-existent.
Additionally, the campaign uncovered potential tax evasion amounting to Rs 24,010 crore (Rs 8,805 crore for states and Rs 15,205 crore for the central government).
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