Delhi becomes “Capital of GST Evasion Cases” with Highest Fraudulent ITC Amounts in Q3 FY24

Our Capital City gained notoriety for having the highest amount of Input Tax Credit Scams in attempts to evade GST
GST Evasion Cases - Fraudulent ITC - Q3 FY24 - taxscan

During the third quarter of the 2023-24 fiscal year, Delhi gained notoriety for topping the charts in Goods and Services Tax ( GST ) evasion by fraudulent entities. Officials reported that between October and December 2023, 483 sham companies were exposed in the capital, implicated in suspected GST evasion amounting to Rs 3,028 crore.

Delhi secured the third position, lagging behind Maharashtra (926) and Rajasthan (507), in terms of the count of identified counterfeit GST entities during this period.

However, it is noteworthy that the suspected GST evasion amounts in Maharashtra and Rajasthan were Rs 2,201 crore and Rs 197 crore, respectively, indicating a lower magnitude compared to Delhi.

Under the purview of the Central Board of Indirect Taxes and Customs, in collaboration with state and union territory governments, GST authorities have been actively executing operations since May 2023 to uncover fraudulent registrations and the issuance of fictitious invoices devoid of genuine goods and services transactions.

In the quarter concluding in December 2023, a nationwide total of 4,153 sham entities engaging in suspected Input Tax Credit ( ITC ) evasion, totaling around Rs 12,036 crore, were identified, leading to 41 arrests. In Delhi, authorities thwarted input tax credit of Rs 90 crore and apprehended 11 individuals involved in these illicit activities. Following Delhi in terms of estimated GST evasion were Maharashtra, Uttar Pradesh (Rs 1,645 crore), Andhra Pradesh (Rs 765 crore), and Haryana (Rs 624 crore).

Since the initiation of the special drive, a cumulative total of 29,273 sham entities engaged in suspected ITC evasion, totaling Rs 44,015 crore, have been exposed nationwide.

Despite no response from the office of Finance Minister Atishi, officials from the trade and taxes department affirmed that measures were underway to combat the infiltration of counterfeit entities into the GST network.

An official, speaking anonymously, mentioned the establishment of a centralized GST registration cell for receiving and processing new applications. This initiative has contributed to reducing the number of entities obtaining “deemed approval” for GST registration without manual scrutiny of documents, which was observed in nearly 50,000 out of 1.46 lakh applications received by the department in 2022-23.

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