Saturday, May 13, 2023

Special Drive for Fake GST Registrations and to control GST revenue leakages


The Central Board of Indirect taxes and Customs (GST Policy Wing) has issued Instruction No. 01/2023-GST dated May 4, 2023, providing guidelines for a Special All-India Drive against fake registrations.

Highlights of the instruction are as follows:

Special Drive: A nation-wide effort should be launched on an All-India basis to detect suspicious/fake registrations and conduct necessary verification to prevent further revenue loss to the Government.

Common Guidelines: Common guidelines have been issued to ensure uniformity in action by field formations and to facilitate effective coordination and monitoring during the Special Drive.

Period of Special Drive: The Special Drive will be conducted from May 16, 2023, to July 15, 2023.

Identification of fraudulent GSTINs: Based on detailed data analytics and risk parameters, GSTN (Goods and Services Tax Network) will identify fraudulent GSTINs for both State and Central Tax authorities. The details of these suspicious GSTINs, categorized by jurisdiction, will be shared with the respective State/Central Tax administration for verification.

Information Sharing Mechanism: Close coordination among State Tax administrations, as well as between State and Central tax administrations, is crucial for the successful implementation of the Special Drive. Nodal officers will be appointed by each Zonal CGST Zone and State to ensure seamless data flow and coordination.

Action by Field Formations: Upon receiving data from GSTN (or DGARM) through the Nodal Officer, the tax officers in the respective jurisdiction will conduct a time-bound verification of the suspicious GSTINs. If it is found that the taxpayer is non-existent and fictitious after detailed verification, the tax officer will initiate immediate action to suspend and cancel the registration of the taxpayer under the provisions of Section 29 of the CGST Act, along with the relevant rules.

Recovery of Input Tax Credit: In addition to canceling the registration of the non-existing taxpayer, the recipients who have received input tax credit from such non-existing taxpayers will be identified through the details provided in FORM GSTR-1. Suitable action will be taken to demand and recover the input tax credit wrongly availed by such recipients based on the invoices issued by the non-existing supplier.

These guidelines aim to facilitate a coordinated effort to combat fake registrations, protect government revenue, and take appropriate action against non-existent and fraudulent taxpayers.