• Notification Date: 11-05-2023
• Notification No: N/A

Two-month Special Drive to Identify and Eliminate Fake GST Registrations

The CBIC will undertake a two-month-long special drive to detect fake GST registrations and take action to identify the masterminds/beneficiaries as it aims to weed out fake ITC claims. Fake/non-genuine registrations are being used to fraudulently pass on input tax credit (ITC) 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 fake ITC has become a serious problem, wherein fraudulent people engage in dubious and complex transactions, causing revenue loss to the government, the GST Policy wing of the CBIC said. 

"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 Central Board of Indirect Taxes and Customs (CBIC) said in a communication. 

Currently, around 1.39 crore taxpayers registered under Goods and Services Tax (GST). The identification of fraudulent GST identification numbers (GSTINs) would be based on detailed data analytics and risk parameters. 

GSTN will identify such fraudulent GSTINs and share the details of such suspicious GSTINs with the concerned State/ Central Tax administration for initiating a verification drive and conducting necessary action subsequently. 
 
The National Coordination Meeting of the State and Central GST officers on April 24 discussed the issue of unscrupulous elements misusing the identity of other persons to obtain fake/ bogus registration under GST. 
On receipt of data from GSTN, a time-bound exercise of verification of the suspicious GSTINs shall be undertaken by the concerned jurisdictional tax officer(s). If, after detailed verification, it is found that the taxpayer is non-existent and fictitious, then the tax officer may immediately initiate action for suspension and cancellation of the registration. 

"Action may also be taken to identify the masterminds/ beneficiaries behind such fake GSTIN for further action, wherever required, and also for recovery of Government dues and/or provisional attachment of property/ bank accounts, etc. as per provisions of section 83 of CGST Act," the CBIC said. 

NA Shah Associates, Partner, Indirect Tax, Parag Mehta said the drive against fake registrations and fake ITC would ensure such persons are removed from the system and the benefits of GST are available to all the compliant assesses. 
 
"It must also be ensured that in the zeal to detect such assesses the law compliant assesses are not harassed. Proper procedures and SOPs should be issued to ensure the least inconvenience to normal business houses," Mehta added. 

AMRG & Associates Senior Partner Rajat Mohan said these two months of the drive may yield huge tax collections in the coming months, breaking the glass ceiling once again. GST collections touched a record high of Rs 1.87 lakh crore in April.