• Notification Date: 11-02-2022
• Notification No: N/A

Fake Transactions worth Rs.32,310 Crores in 5.4 Years in Gujarat

Fake billing is being practised on a huge scale in Gujarat ever since the goods and service tax (GST) has been introduced in July 2017 in India. The Gujarat Government has faced a lot of drainage due to these billing scams. According to the report of the state commercial tax department, the GST department has discovered fake billing transactions in Gujarat worth Rs.32,310 crore till December 2021. The fake transactions were being carried out by various shell companies. About 1875 companies participated in these cases that caused Rs.4,264 crore of cash drainage. There have been several fraudulent claims for input tax credits (ITC) by these shell companies that has led to a huge downturn in the government coffers.

The State and Central governments have been continuously trying to upgrade and introduce new policies to resolve the issues of fake ITC transactions. The modus operandi has been constantly amended by the government to prevent such issues. But it has only increased such fraudulent activities that have been reported over the years. The most concerning loophole in the GST framework is the grant of GST registrations without making any physical verification of the business location. According to the report of a renowned source, the GST Council made several attempts to resolve the policy loopholes in December 2020. Physical verification of the business location was mandatory for the registration. But the insufficiency of staff in the GST department has made the physical verification process extremely tough.

According to the state commercial tax commissioner, Milind Torwane has remarked that there have been several misuses of the GST provisions and the scammers have taken advantage of the loopholes for executing wrong deeds. About 1172 fake billings have been detected in the investigations between April and December 2021. The rate of fraudulence cases has increased by 67% compared to the previous three years. In the last three years, about 703 cases of the scam were detected.

The SGST Department has reported that the scammers have been continually taking advantage of the loopholes in the GST framework. The department is taking new steps to prevent further cases of fraudulency. About 39 mobile squads have been appointed at the check posts to prevent any such false transactions. Several toll booths have been deployed to keep a record of the interstate movement of goods. The control room is active on a 24/7 basis and they are providing all the information to the team operating on the front end. The GST department is also keeping track of the sensitive commodities. The e-way bills are being monitored to reduce tax evasion.