The Central Board of Indirect Taxes and Customs (CBIC) has released instructions with guidelines for the all-India drive against fake Goods and Services Tax (GST) Registrations to tackle loss by bogus Input Tax Credit (ITC) Claims.
During the National Coordination Meeting of the State and Central GST officers held in New Delhi on 24th April 2023, the issue of unscrupulous elements misusing the identity of other persons to obtain fake/ bogus registration under GST, with an intention to defraud the Government exchequer was deliberated.
Such fake/ non-genuine registrations are being used to fraudulently pass on input tax credits to unscrupulous recipients by issuing invoices without any underlying supply of goods or services or both. This menace of fake registrations and issuance of bogus invoices for passing off fake ITC has become a serious problem, wherein fraudulent people engage in dubious and complex transactions, causing revenue loss to the government.
The instructions released observed that various modus operandi of obtaining such fake registrations have been detected by Central and State Tax administrations. In some cases, forged documents, such as forged electricity bills, property tax receipts, rent agreements, etc. are being used as proof of principal place of business to obtain GST registration.
In one of such recent cases detected by Gujarat State Tax authorities, it has been found that a few fraudsters have obtained fake GST registrations on the basis of PAN and Aadhaar number of persons from economically weaker sections without their knowledge.
It was revealed that the phone numbers on the Aadhaar cards of these persons were got fraudulently modified at the nearest Aadhaar Seva Centre, by taking these persons to the said Aadhaar Seva Centre by giving a nominal cash amount under the guise of a government scheme and getting their Aadhaar Cards linked to a dummy mobile number by using their thumb impression.
The following guidelines were issued in mission mode for the purpose of dealing with the uprise of such bogus Goods and Services Tax Registrations used to avail Input Tax Credit unlawfully: –
Period of Special Drive: 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 instruction also contained detailed guidelines for–
Identification of fraudulent GSTINs
Information Sharing Mechanism
Action to be taken by field formations
Feedback and Reporting Mechanism
National Coordination Committee
The GST Council Secretariat will compile the reports received from various formations and make it available to the National Coordination Committee immediately. The unique modus operandi found during this special drive will be compiled by the GST Council Secretariat and presented before the National Coordination Committee, which will be subsequently shared with Central and State Tax administrations across the country.
The instructions further stated that difficulties, if any, in the implementation of these instructions may be informed to the Board (gst-cbec@gov.in).
The released guidelines were also attached with the formats of reports and feedback to be filed by the concerned officials.
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