Tax Officials To Undertake 2-Month Special Drive To Uncover Fake GST Registrations

The Central Board of Indirect Taxes and Customs plans to take swift action against fraudulent GST registrations, including identifying the masterminds and beneficiaries behind them.

The Central Board of Indirect Taxes and Customs (CBIC) is set to launch a two-month-long initiative to uncover fraudulent GST registrations and track down the culprits behind them, reported PTI. The objective of the campaign is to prevent false input tax credit (ITC) claims from being made through fake or non-genuine GST registrations.

According to reports, perpetrators are using fake registrations to issue invoices without any corresponding supply of goods or services, allowing them to unlawfully pass on ITC to unwary recipients. The CBIC plans to take swift action against such unscrupulous activities, including identifying the masterminds and beneficiaries behind them.

This menace of fake registrations and issuance of bogus invoices for passing fake ITC has become a serious problem, wherein fraudulent people engage in dubious and complex transactions, causing revenue loss to the government, the GST Policy wing of the CBIC said.

"A Special All-India Drive may be launched by all Central and State Tax administrations during the period 16th May 2023 to 15th July 2023 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, according to PTI. 

Currently, there are 1.39 crore taxpayers registered under Goods and Services Tax (GST), the report noted. 

It also said that during the National Coordination Meeting of State and Central GST officers held on April 24, it was discussed that unscrupulous individuals are using the identity of others to obtain fake or bogus registrations under the GST. To tackle this issue, GSTN will identify suspicious GSTINs and share their details with the relevant State/Central Tax administration for necessary verification and action.

On receipt of data from GSTN, a time-bound exercise of verification of the suspicious GSTINs shall be undertaken by the concerned jurisdictional tax officer(s). If, after detailed verification, it is found that the taxpayer is non-existent and fictitious, then the tax officer may immediately initiate action for suspension and cancellation of the registration.

"Action may also be taken to identify the masterminds/ beneficiaries behind such fake GSTIN for further action, where ever required, and also for recovery of Government dues and/or provisional attachment of property/ bank accounts, etc. as per provisions of section 83 of CGST Act," the CBIC said.

NA Shah Associates, Partner, Indirect Tax, Parag Mehta told PTI that the drive against fake registrations and fake ITC would ensure such persons are removed from the system and the benefits of GST are available to all the compliant assesses.

"It must also be ensured that in the zeal to detect such assesses the law compliant assesses are not harassed. Proper procedures and SOPs should be issued to ensure the least inconvenience to normal business houses," Mehta said.

In April GST collections touched a record high of Rs 1.87 lakh crore.