NEW DELHI: The government is working to tighten the procedure for new GST registration after it has
detected GST fraud of over Rs 5,000 in the last one week in a major anti-tax evasion drive. The idea is to ensure only genuine businesses get a GST registration.
“Businesses whose owners or promoters do not have commensurate income tax payment records will require physical and financial verification before their companies can be given GST registration,” a top official from the Directorate General of GST Intelligence (DGGI) told this publication. The move comes after the government initiated a drive against fake GST invoice racket on November 9.
Surging instances of non-compliance has prompted the government to tighten the process for new GST registration. “In just the last four days, 25 persons have been arrested including two kingpins and two professionals in some 350 cases booked for issuance of fake invoices against 1,180 entities. Actual amount of fake ITC involved is being ascertained,” the official added.
The fake invoices were used to evade goods and services tax (GST) and income tax and to divert funds from companies. Of the cases shared so far, the amount was higher than Rs 5,000 crore and officials expect the number to be further higher. Besides, the cases would also be investigated against the beneficiaries by the Enforcement Directorate for money laundering.
Sources say the drive against GST evaders and ITC fraudsters is expected to further intensify in the days to come. The drive was intensified post a high-level meeting in the Department of Revenue earlier this month and was attended via video conferencing across the country by all the senior officials of DGGI, GST, GSTN, Enforcement Directorate, CBIC and CBDT along with their chairmen.
It is also being examined whether, apart from taking action against the beneficiaries under GST laws,
Income Tax Act, and Prevention of Money Laundering Act, issuers of fake invoices as well as beneficiaries of such invoices can be detained under COFEPOSA COFEPOSA Act (Conservation of Foreign Exchange and Prevention of Smuggling Activities), officials added.