Introduction: In recent times, there has been an alarming increase in instances of taxpayers misusing the identities of others to obtain fake registrations under the GST law. To address this issue and protect government revenue, the Centre and States have initiated a two-month special drive. Starting from May 16, 2023, and running until July 15, 2023, the drive aims to identify suspicious and fake Goods and Services Tax Identification Numbers (GSTINs) and take appropriate action to eliminate fraudulent billers from the GST ecosystem.
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Detecting Suspicious/Fake GSTINs:
The primary objective of the special drive is to identify suspicious and fake GSTINs that are being used for fraudulent activities within the GST ecosystem. These registrations have been obtained with the intention of defrauding the government by issuing invoices to claim input tax credit without any actual supply of goods or services.
How will Fake GSTINs be Identified?
To identify fake GSTINs, the Goods and Services Tax Network (GSTN) will play a crucial role by employing data analytics and risk parameters. GSTINs that fail to file their GST returns, delay in filing returns, or provide misleading information will be categorized as suspicious. The GSTN will share the details of these identified suspicious GSTINs, jurisdiction-wise, with the concerned Central or State tax administration authorities to initiate verification.
Actions Taken by GST Officers on Detection of Fake GSTINs:
Upon receiving data from the GSTN or through the Nodal Officer, the tax officers will immediately take one or more of the following actions:
1. Initiate the suspension and cancellation of the GST registration.
2. Plan and execute field visits to examine the registered premises and associated documents.
3. Examine the need to block input tax credit in the electronic credit ledger as per the provisions.
4. Identify the recipients to whom the input tax credit has been passed by non-existent taxpayers through the details furnished in the GSTR-1.
5. Take suitable action when a linked suspicious GSTIN is detected during the investigation/verification process.
Key Considerations for Taxpayers:
During the special drive, taxpayers need to consider the following points if GST officers visit their business premises or the address provided during GST registration:
1. Display the GSTIN prominently at their business premises.
2. Ensure the renewal of rent agreements and gather KYC documents of Proprietor/Partner/Directors to review all supporting documents submitted during GST registration.
3. Display the exact trading name as mentioned in the GST Registration Certificate along with the GSTIN.
4. Review details of suppliers from whom goods are being purchased and reconcile them with GSTR-2B each month.
5. Verify the authenticity of suppliers to ensure goods are purchased from genuine sources.
6. Maintain accurate books of account as prescribed by the GST Act and ensure compliance with all requirements.
7. Regularly check the compliance status of suppliers of goods and services, and timely file GSTR-1 and GSTR-3B within the due dates.
Consequences for Non-Compliance:
Failure to comply with the GST regulations may result in the following consequences:
1. Penalties as per the CGST and SGST Acts.
2. Initiation of procedures to cancel the GST registration.
3. Blocking of Input Tax Credit.
4. Recovery of Input Tax Credit if availed from any fake GST invoice.
Conclusion: The government’s special drive to tackle fake GST registrations and combat fraud is a significant step toward protecting government revenue and maintaining the integrity of the GST system. By employing data analytics and taking appropriate actions against suspicious GSTINs, the authorities aim to eliminate fraudulent billers from the GST ecosystem. Taxpayers should proactively comply with their obligations, review supplier details, and ensure all necessary documentation is in order to avoid penalties and the cancellation of their GST registration. This collective effort will help in building a robust and transparent GST ecosystem that safeguards the interests of both taxpayers and the government.
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