New Delhi, June 20, 2023 – During the National Co-ordination Meeting of the State and Central GST officers held on April 24th, 2023, a critical issue regarding the misuse of identities to obtain fake registrations under GST was discussed. Unscrupulous individuals have been exploiting this practice to defraud the government exchequer, leading to revenue losses. To combat this growing menace, a Special All-India Drive has been launched, and guidelines have been issued for a concerted and coordinated effort by the Central and State tax authorities.
The drive aims to detect and eliminate suspicious and fake Goods and Services Tax Identification Numbers (GSTINs) and prevent the issuance of bogus invoices for the fraudulent passing of input tax credit. Various methods used to obtain fake registrations have been identified, including the use of forged documents such as electricity bills, property tax receipts, and rent agreements. Disturbingly, recent cases have revealed the misuse of PAN and Aadhaar numbers from individuals in economically weaker sections, with fraudsters altering Aadhaar card details through fraudulent means.
To ensure effective implementation, the following guidelines have been established for the Special Drive:
- Period of Special Drive: The Special All-India Drive will take place from May 16th, 2023, to July 15th, 2023. During this time, Central and State Tax administrations will conduct thorough verifications and necessary actions to weed out fake billers from the GST ecosystem and protect government revenue.
- Identification of Fraudulent GSTINs: Detailed data analytics and risk parameters will aid the Goods and Services Tax Network (GSTN) in identifying suspicious GSTINs, which will be shared with the respective State and Central Tax administrations. Field formations are encouraged to supplement this list using available analytical tools and local intelligence, including Aadhaar database insights and past modus operandi alerts.
- Information Sharing Mechanism: Nodal officers will be appointed by each Zonal CGST Zone and State to ensure seamless data flow and coordination between the State Tax administrations, Central tax administrations, GSTN, and DGARM. The contact details of these officers will be shared with the GST Council Secretariat for effective communication.
- Action by Field Formations: Jurisdictional tax officers will conduct time-bound verifications of suspicious GSTINs. If a taxpayer is found to be non-existent and fictitious, immediate action will be taken to suspend and cancel their registration. Input tax credit in the Electronic Credit Ledger may also be blocked without delay. Recipients who have availed input tax credit from non-existent suppliers will face appropriate action for recovery. Authorities will investigate and take action against masterminds and beneficiaries of fake GSTINs, including provisional attachment of property and bank accounts.
- Feedback and Reporting Mechanism: Field formations will provide weekly action taken reports to the GST Council Secretariat. Any novel modus operandi discovered during the drive will be reported. Upon completion of the drive, GSTIN-wise feedback on the verification results will be provided to GSTN and DGARM.
- National Coordination Committee: A National Coordination Committee, headed by Member [GST], CBIC, and including representatives from CGST Zones and State Tax authorities, will monitor the progress of the special drive. The GST Council Secretariat will serve as the committee’s secretariat, with assistance from GSTN and the GST Policy Wing, CBIC.
These guidelines have been issued following the decision of the National Coordination Committee. Any implementation challenges or difficulties should be communicated to the Board at gst-cbec@gov.in.
The Special All-India Drive against fake registrations reflects the commitment of the Central and State tax authorities to safeguard government revenue and protect the integrity of the GST system. It is a crucial step towards ensuring a transparent and fair taxation environment.