Guidelines for Second special All-India Drive against fake registrations

Central Board of Indirect Taxes & Customs (CBIC) issued Instruction No. 02/2024-GST on 12th August 2024, outlining guidelines for a second special All-India drive against fake GST registrations. This initiative follows a successful first drive conducted from 16th May 2023 to 15th August 2023, which effectively identified and removed numerous fake GST registrations from the system. The National Coordination Committee, comprising senior officers from both central and state tax authorities, recognized the need for continued efforts to clean up the tax base and combat the issuance of fake invoices. Consequently, it was decided to conduct a second special drive starting from 16th August 2024, lasting until 15th October 2024. This coordinated effort aims to detect and eliminate suspicious GST Identification Numbers (GSTINs) to prevent further revenue loss to the government.

The guidelines for this special drive emphasize the identification of fraudulent GSTINs through collaboration between GSTN and the Directorate General of Analytics and Risk Management (DGARM), using advanced data analytics and risk parameters. The identified high-risk GSTINs will be verified by central and state tax authorities within their respective jurisdictions. The field formations are instructed to conduct timely verifications, and if a taxpayer is found to be non-existent or fictitious, immediate actions such as suspension and cancellation of registrations will be taken. Additionally, the authorities may block input tax credits in the Electronic Credit Ledger under Rule 86A of the CGST Rules, and initiate recovery actions against recipients who have wrongly availed credits based on fake invoices.

To ensure uniformity and effective coordination across the nation, a set of common guidelines has been issued. The drive also includes the appointment of nodal officers by each CGST zone and state, who will oversee the coordination and communication between different tax jurisdictions. Detailed feedback and reporting mechanisms have been established, requiring weekly reports from all participating zones and states. These reports will document the actions taken, the amount of tax evasion detected, and the recovery made, among other details. The GST Council Secretariat will compile these reports and present them to the National Coordination Committee for further evaluation. The drive also aims to identify and take action against the masterminds behind these fake GSTINs, with provisions for provisional attachment of property and bank accounts as necessary.

F. No. CBIC- 20/16/30/2020-GST
Government of India
Ministry of Finance
Department of Revenue
Central Board Indirect Taxes & Customs,
GST Policy Wing,
New Delhi

Instruction No. 02/2024-GST, Dated: 12th August 2024

To,
All the Principal Chief Commissioners/ Chief Commissioners/ Principal Commissioners /Commissioners of Central Tax
All the Principal Directors General/ Directors General of Central Tax

Madam/Sir,

Subject: Guidelines for Second special All-India Drive against fake registrations– regarding.

Attention is invited to the Instruction No. 01/2023-GST dated 04.05.2023 vide which guidelines were issued for conducting a special All-India drive during the period from 16^th May 2023 to 15^th July 2023 (which was further extended till 14^th August 2023), for verification and detection of suspicious/ fake registrations and for taking timely remedial action to prevent any further revenue loss to the Government. A National Coordination Committee headed by Member (GST), CBIC and including the senior officers from different States and Centre was also formed to take decisions and monitor the progress of this special drive.

1.2 A meeting of the said National Co-ordination Committee was held on 11th July 2024, wherein it was discussed that the special All-India drive conducted during the year 2023, was found quite effective in weeding out fake registrations. The Committee felt that there may be a need for further focused and coordinated action by Central and State tax authorities to clean up the tax base and to take concerted action against the fake registrations and fake/bogus invoices, on the same pattern as was done during the said drive. It was, therefore, decided that a second special All-India drive against fake registrations may be conducted by all Central and State tax authorities for a period of two months starting from 16^th August 2024.

1.3 The National Co-ordination Committee also decided that like the previous drive, a set of common guidelines may be issued to ensure uniformity in action by the field formations and for effective coordination and monitoring of the action taken during this special drive.

2. In the light of above, in partial modification of the Instruction No. 01/2023-GST dated 04.05.2023, the following guidelines are issued for such concerted action on suspicious/ fake registrations during the special All-India drive during this year:

a) Period of Special Drive:

The second Special All-India Drive may be launched by all Central and State Tax administrations from 16th August 2024 to 15th October 2024 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.

b) Identification of fraudulent GSTINs:

GSTN, in coordination with Directorate General of Analytics and Risk Management (DGARM), CBIC, will identify suspicious/ high-risk GSTINs, based on detailed data analytics and risk parameters, for the purpose of verification by the State and Central Tax authorities during the said drive and share the details of such suspicious GSTINs, jurisdiction wise, with the concerned tax administration. In case of such suspicious GSTINs falling under the jurisdiction of Central Tax, the details will be shared with the Central Tax authorities by GSTN through DGARM. Besides, the State and Central Tax Authorities, may, at their own option, supplement this list by data analysis/ intelligence gathering at their end, using various available analytical tools like BIFA/ GAIN, ADVAIT, NIC Prime, E-Way Bill Analytics etc., as well as through human intelligence, modus operandi alerts, experience gained through the past detections, as well as the first special All-India drive.

c) Action to be taken by field formations:

i. 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 of the said taxpayer in accordance with the provisions of section 29 of CGST Act, read with the rules

ii. Further, the matter may also be examined for blocking of input tax credit in Electronic Credit Ledger as per the provisions of Rule 86A of CGST Rules without any delay. Additionally, the details of the recipients to whom the input tax credit has been passed by such non-existent taxpayer may be identified through the details furnished in FORM GSTR-1 by the said

iii. Where the recipient GSTIN pertains to the jurisdiction of the said tax authority itself, suitable action may be initiated for demand and recovery of the input tax credit wrongly availed by such recipient on the basis of invoice issued by the said non-existent supplier, without underlying supply of goods or services or both.

iv. In cases where the recipient GSTIN pertains to a different tax jurisdiction, the details of the case including the details of the recipient GSTIN, along with the relevant documents/ evidence, may be sent to the concerned tax authority, as early as possible, in the format mentioned in Annexure-B. For sharing such details/ information and coordination with other tax authorities, GSTN Back Office has an online functionality, namely, ‘Initiate Enquiry’ in the Enforcement module, which is available to all tax officers who have been assigned the role of ‘Enforcement Officer’ on the Back Office (BO Portal).

v. For the purpose of communicating this information to the recipient tax jurisdiction, a nodal officer shall be appointed immediately 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 must be shared by the concerned tax authority with GST Council Secretariat within three days of issuance of this letter. GST Council Secretariat will compile the list of the Nodal officers after procuring the details from all the tax administrations and will make the compiled list available to all the tax jurisdictions and to GSTN.

vi. The nodal officer of the tax jurisdictions may be assigned the role of ‘Enforcement Officer’ on the BO Portal. Wherever the details of the recipient GSTIN needs to be shared to other tax jurisdiction, the same may be done through the nodal officer. The said nodal officer will accordingly share the information about the recipient GSTIN with the nodal officer of the concerned recipient tax administration, through the said functionality, attaching a pdf document in the format mentioned in Annexure-B. The nodal officer of the recipient tax administration will further share the details with the concerned jurisdictional tax officers, for necessary action.

vii. GSTN will issue detailed guidelines/ advisory regarding usage of this functionality, which may be referred to.

viii. 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. Further, during the investigation/ verification, if any linked suspicious GSTIN is detected, similar action may be taken/ initiated in respect of the same.

d) Feedback and Reporting Mechanism:

i. An action-taken report in the format enclosed as Annexure-A (for GSTINs identified by GSTN and those identified locally) and Annexure-A1 (for those GSTINs received from other tax administrations through ‘Initiate Enquiry’ module) will be uploaded by each of the State as well as CGST Zones, through the nodal officer referred to in para 2(c)(v), on the portal provided for the same, on a weekly basis on the first working day after completion of the week, for enabling the GST Council Secretariat to monitor the same.

ii. If any novel modus operandi is detected during the verification/ investigation, the same may also be indicated in the said action taken report. On conclusion of the drive, GSTIN-wise feedback on the result of verification of the suspicious GSTINs shared by GSTN, will be provided by the field formations through the nodal officer to GSTN, as per the format enclosed in Annexure- C.

3. The Principal Chief Commissioner/ Chief Commissioner of the Central GST Zones and the Chief Commissioner/ Commissioner of the States/ UTs may monitor the progress of action taken in respect of list of suspicious GSTINs received from GSTN and chosen locally. The action taken in respect of the GSTINs received from other tax administrations through the ‘Initiate Enquiry’ module may also be monitored.

4. GST Council Secretariat will compile the reports received from various formations and make it available to the National Coordination Committee The unique modus operandi found during this special drive will be compiled by GST Council Secretariat and presented before National Coordination Committee, which will be subsequently shared with Central and State Tax administrations across the country.

5. Difficulties, if any, in the implementation of these instructions may be brought to the notice of the Board ([email protected]).

Sanjay Mangal

Principal Commissioner (GST)

Enclosure: As above

Copy to:

1. The Joint Secretary, GST Council Secretariat, New Delhi for information and necessary action. She is also requested to immediately take up with the Chief Commissioners/ Commissioners of State Tax of various States/ UTs for similar action at their end.

Copy for information and necessary action to:

1. The CEO, GSTN, New Delhi
2. The Additional Director General, DGARM, New Delhi

Annexure-A

Weekly Report on Action taken in Special All-India Drive against Fake Registrations

Name of the State/ CGST Zone:

Week ending……………… (Amount in Rs Lakhs)

–

Note:

1. The report is to be given for action taken up to week, e. for the period from start of the drive up to the end of the week, for which report is being sent.
2. A separate note may be enclosed in respect of any special modus operandi noticed during the week.

Annexure-A1

Weekly Report on Action Taken in Cases of Beneficiary received from other jurisdictional Nodal Officers

Name of the state/CGST Zone:

Week ending………………………………………………….. (Amount in Rs. Lakhs)

Note:

The report is to be given for action taken up to the week, i.e. for the period from the start of the drive up to the end of the week, for which report is being sent.

Annexure-B

Intimation about details of the recipients of the non-existent suppliers detected during the special All-India drive against fake registrations

A. Tax administration of the non-existent supplier:

B. Tax administration of the recipient:

C. Details of the supplier, recipients and the tax amount involved:

D. Other relevant details, if any:

E. Details of enclosures (Panchnama/ Inspection report/ PV report/ Other relevant documents or evidences):

Place:

Date:

(Signature)

Name: Designation:

Email address:

Enclosures: As above

Note:

The amount mentioned in columns 5 to 9 of the table may be provided Financial Year wise.

Annexure – C

GSTIN-wise feedback regarding the outcome of the action against the suspicious GSTINs

Name of the State/ CGST Zone:

Date of submission:

Note– Details are to be provided for each GSTIN covered in the drive, whether in the initial list or added subsequently

# For Column 6 – Reason for lead not correct – Please choose one of the following-

a. Data incorrect

b.Data correct but taxpayer had reasonable explanation

c. Data correct but taxpayer had complied before enforcement action

d. Case already investigated before enforcement action