Blog No. 65: Special All-India Drive against fake/bogus registrations

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The issue of misuse of the identity of the various persons and obtaining registration under GST law for passing on the bogus input tax credit has been observed by the government. In order to identify all such bogus registration, it has been decided to launch a special drive on All India basis from 16th May 2023 to 15th July 2023. In this regard, Instruction No. 01/2023-GST dated 04.05.2023 has been issued by the Board.

 

Read in detail about the instruction below:

 

  • During the National Co-ordination Meeting held at New Delhi on 24th April 2023, the issue of unscrupulous elements misusing the identity of other persons to obtain fake/bogus registrations and fraudulently passing of input tax credit to unscrupulous recipients by issuing invoices without any underlying supply of goods or services or both which is causing revenue loss to the government was discussed.

 

  • It has been found that forged documents like forged electricity bills, property tax receipts, rent agreements are being used to obtain fake registrations. Recently, bogus registration was obtained on the basis of PAN and Aadhaar number of persons from economically weaker sections without their knowledge.

 

  • To deal with this issue a Special All India Drive is being launched. The guidelines for the same are as under:

 

1.    Period of Special Drive: It will be in action from 16th May 2023 to 15th July 2023.

 

  1. Identification of fraudulent GSTINs: With the help of risk parameters and data analytics fraudulent GSTINs will be identified, and field formation will play the vital role by analysing data at their own end using various tools like BIFA, ADVAIT, NIC Prime, E-Way analytics, etc., as well as through human intelligence, Aadhar database, other local learnings and the experience gained through the past detections.

 

  1. Information Sharing Mechanism: For ensuring smooth co-ordination and seamless flow of data, a nodal officer will be appointed by each of the Zonal CGST Zone and State. The name, designation, phone number/ mobile number and E-mail Id of such Nodal officer(s) appointed by CGST Zones and States would be shared by the concerned tax authority with GST Council Secretariat.

 

  1. Action to be taken by field formations: After conduction detailed verification, if  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 of the said taxpayer in accordance with the provisions of section 29 of CGST Act, read with the rules thereof.

 

The matter may also be examined for blocking of input tax credit and action would also be taken to identify the masterminds/beneficiaries behind such fake GSTINs.

 

  1. Feedback and Reporting Mechanism: An action report will be prepared and provided to GST Council Secretariat on a weekly basis on the first working day    after completion of the week in the prescribed format. At the end of the drive, all   suspicious GSTINS with feedback will be provided to GSTN/DGARM by the field     formation.

 

  1. National Coordination Committee: A National coordination committee which is to be headed by Member (GST), CBIC and including Principal Chief Commissioners/ Chief Commissioners Delhi and Bhopal CGST Zones and Chief Commissioners/ Commissioners of State Tax of Gujarat, West Bengal and Telangana shall monitor the progress of this special drive and will meet periodically. This committee will be assisted by GSTN and Principal Commissioner, GST Policy Wing, CBIC.

 

Our Remarks

 

  1. The issue has affected several innocent taxpayers in the Country. In some cases, it has been observed by us that despite misuse of details of a person, the intelligence authorities have proceeded to issue show cause notice demanding the tax amount along with equivalent penalty under section 74 as well as section 122(1A) on the person whose details have been misused. Further, interest is also demanded u/s 50.

 

  1. In some cases, it has also been highlighted to us that the assesses cancelled their VAT Registration Numbers but said unscrupulous elements managed to take out details regarding said assesses and got them migrated to GST regime without their knowledge. Hence, caused a great loss to exchequer. In said circumstances as well, innocent taxpayer is being proceeded u/s 74 as well as 122(1A).

 

  1. We highly recommend affected innocent taxpayers to file a representation to the Board highlighting the facts of their own case so that the Board can take cognizance of the situation considering peculiar facts of each case and can address the situation adequately.

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