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Discover the details of the Special All-India Drive against Fake Registrations under GST initiated by CBIC. Get insights into the guidelines outlined in the instruction dated 04.05.2023, covering the period, identification of fraudulent GSTINs, information sharing mechanism, action by field formations, feedback reporting, and the National Coordination Committee’s role. Stay informed about the measures to combat fake registrations and protect government revenue. Learn about the weekly reporting format and essential precautions for registered persons.

CBIC is initiating this two-month Special Drive to detect fake GST Registrations and suspicious GSTINs who are passing on Input Tax Credit fraudulently to recipients without Actual supply of Goods or Services or both and take action against them to prevent any further revenue loss to the government.

Fake Registrations under GST

CBIC vide Instruction No-01/2023-GST dated 04.05.2023 issued Guidelines for Special All-India Drive against Fake Registrations. The following points are specified in this Instruction: –

1. During the National Co-ordination meeting of the State and Central GST Officers held at New Delhi on 24th April 2023,

  • The matter of corrupt elements misusing the identity of other persons to obtain fake Registration under GST was considered.
  • Such Fake/Non-Genuine Registrations are being used to pass on the Input Tax Credit to fraudulent recipients by issuing Invoices without Actual Supply of Goods or Services or both. This Threat of Fake Registrations and issuance of fake Input Tax Credit are causing great revenue loss to the government.

2. Various manner of obtaining such fake Registrations have been exposed by Central and State authorities. In some cases, forged documents such as forged electricity bills, property tax receipts, rent agreements, etc are being used as proof of principal place of business to obtain GST Registration.

In a recent case in Gujarat, it has been found that a few fraudsters have obtained fake GST Registrations on the basis of PAN and Aadhaar number of persons from economically weaker sections without their knowledge. It was revealed that phone numbers on the Aadhaar Cards of these persons were got fraudulently modified at the nearest Aadhaar Seva Centre, under the false cover of the government and on the sake of a nominal cash amount, these fraudulent persons take these persons (whose PAN and Aadhaar are attached for fake registrations) to the Aadhaar Seva Centers and getting their Aadhaar Card linked to dummy mobile number by using their Thumb impression.

3. In the meeting,

  • It was discussed that there is a need of concerted and coordinated action on a mission mode by Central and State Authorities to tackle this problem of fake registration and fake Input Tax Credit in a more systematic manner
  • It was decided that a nation-wide effort in the form of a Special Drive should be launched on all India basis to detect such fake registrations and to conduct requisite Investigation to prevent any further revenue loss to the government.
  • It was decided that during this Special Drive, some common guidelines may be issued to ensure consistency and co-ordination in the action taken. The following guidelines are issued for such concerted action on fake dealers/fake billers:

i. PERIOD OF SPECIAL DRIVE:

A Special All India Drive may be launched during the period 16th May 2023 to 15th July 2023 to detect fake GSTINs and to conduct requisite Investigation and further remedial action need to be taken to eliminate these fake billers from the GST Eco-system and to safeguard Government Revenue.

ii. IDENTIFICATION OF FRAUDULENT GSTINs:

    • GSTN will identify such fraudulent GSTINs for State and Central Tax Authorities based upon detailed data analytics and risk parameters.
    • GSTN will share the details of such identified suspicious GSTINs with the concerned Central/State authorities for initiating Investigation of these GSTINs and conducting necessary action on these GSTINs.
    • Various Data Analytical Tools like BIFA, ADVAIT, NIC Prime, E-Way Analytics, etc and through Human Intelligence, Aadhaar Database, other Local learnings and the past experience and past procedures are to be used while preparing the list of such fraudulent GSTINs.

iii. INFORMATION SHARING MECHANISM:

Close Co-ordination between the Central and State Administrations are required for successful implementation of this Special Drive.

For this purpose, a Nodal Officer shall be appointed by each of the Zonal CGST Zone and State to ensure seamless flow of data and for co-ordination with GSTN and DGARM and other Tax Administrations. The name, designation, contact 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 tax administrations and will make the compiled list that are available to all the tax administrations, GSTN and DGARM as and when required.

The Nodal Officer of the State/CGST Zone will ensure that the data received from these tax authorities is made available to the concerned jurisdictional formation within two days positively.

Note: DGARM (Directorate General of Analytics and Risk Management) functions under the CBIC mainly for data analytics and Risk Management.

iv. ACTION TO BE TAKEN BY FIELD FORMATIONS:

Investigation of the suspicious GSTINs shall be undertaken by the concerned jurisdictional tax officer(s) on receipt of data from GSTN/DGARM. If after detailed Investigation, it is found that the taxpayer is fake and fictitious, the GST Officer may initiate an action for suspension and cancellation of the registration of the said fake taxpayer in accordance with the provisions of Section 29 of CGST Act.

    • Input Tax Credit lying in Electronic Credit Ledger may be blocked as per the provisions of Rule 86A of CGST Rules. Further, the details of the recipient to whom Input Tax Credit has been passed on by the non-existing taxpayer may be identified with the help of GSTR-1 filed by the taxpayer in past.
    • In case the recipient GSTIN pertains to the same jurisdiction of the said tax authority itself, suitable action for demand and recovery of the Input Tax Credit wrongly availed by such recipient on the basis of Tax invoice issued by such fake taxpayer, without supply of Goods or Services or both.
    • In case the recipient GSTIN pertains to different jurisdiction, the details of the case along with the relevant documents/evidence may be sent to the concerned tax authority in the format enclosed as Annexure-B , through the Nodal Officer referred in para (ii) above.
    • Action may also be taken to identify the masterminds/beneficiaries behind such fake GSTIN and also for recovery of Government dues and/ or provisional attachment of property/Bank accounts, etc as per the provisions of Section-83 of CGST Act. Further if any associated suspicious GSTIN is detected during the Investigation process, similar action may be initiated against that GSTIN.

v. FEEDBACK AND REPORTING MECHANISM:

An action taken report will be provided by each State and CGST Zones to GST Council Secretariat on weekly basis on the first working day after completion of the week in the format enclosed as Annexure-A.

If any suspicious approach is detected during the Investigation process, the same may also be indicated in the said action taken report. On conclusion of this special drive, GSTIN-wise feedback on the result of verification of the shared suspicious GSTINs, will be provided by the field formations to GSTN/ DGARM, as per the format enclosed in Annexure-C.

vi. NATIONAL CO-ORDINATION COMMITTEE:

    • A National Coordination Committee headed by Member (GST), CBIC and Principal Chief Commissioners/ Chief Commissioners of 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.
    • National Coordination Committee will meet periodically for this purpose. GST Council Secretariat will act as the secretariat of this National Coordination Committee. The Committee will also be assisted by GSTN and Principal Commissioner, GST Policy Wing, CBIC.

4. GST Council Secretariat compile the reports received by various Authorities and make it available to the National Co-ordination 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 authorities across the

Author’s Suggestions

The author advises the registered persons to take following precautions:

  • Kindly ensure that on one premise there should not be more than one registration unless it is clearly demarcated place for each of the registrations.
  • Documents required for demonstrating registration eligibility at the time of inspection- As applicable: –
    • Latest electricity Bill
    • Consent Letter/NOC
    • Municipal Khata Receipt or Property Tax Receipt
    • Rent agreement should be valid, if expired then renew the agreement
    • Aadhar Card and PAN

All above documents should be available in original.

  • Authorized signatory as updated on GST portal should be signing the Invoices.
  • The stock and sale/purchase invoices alongwith other documents if found at the registered place of business, then it is assumed that it pertains to registered person and accordingly it shall be dealt with.
  • Display of RC and GSTIN
    • Every registered person shall display his certificate of registration in a prominent location at his principal place of business and at every additional place or places of business.
    • Also, every registered person shall display his GSTIN on the name board exhibited at the entry of his principal place of business and at every additional place or places of business.
    • If not followed, penalty of Rs. 50,000/- may be imposed.
  • Books of Accounts
    • Every registered person shall keep the books of account as specified in Section 35 read with Rule 56 at the principal place of business and books of account relating to additional place of business mentioned in his certificate of registration and such books of account shall include any electronic form of data stored on any electronic device.
    • For details about Generation and maintenance of electronic records, refer Rule 57.
    • Every registered person required to keep and maintain books of account or other records in accordance with the provisions of sub-section (1) of section 35 shall retain them until the expiry of seventy two months from the due date of furnishing of annual return for the year pertaining to such accounts and records: Provided that a registered person, who is a party to an appeal or revision or any other proceedings before any Appellate Authority or Revisional Authority or Appellate Tribunal or court, whether filed by him or by the Commissioner, or is under investigation for an offence under Chapter XIX, shall retain the books of account and other records pertaining to the subject matter of such appeal or revision or proceedings or investigation for a period of one year after final disposal of such appeal or revision or proceedings or investigation, or for the period specified above, whichever is later.

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)
S. No
No. of GSTINs shared by GSTN/ DGAR M
No. of GSTINs identified locally
Total no. of GSTINs to be verified
No. of GSTINs for whom verification conducted
No. of Non- existing GSTINs found
Action taken
Total Amount of evasion of tax/ ITC detected
Total Amount recovered from GSTINs in the jurisdiction of tax authority
No. of recipients (GSTINs) of such non-existing GSTINs to whom credit has been passed on
Number of recipient s GSTINs located outside jurisdiction, details of which have been shared with the concerned jurisdictional tax authority
Remarks
No of GSTINs suspended
No of GSTIN cancelled
ITC blocked under Rule 86 A
No of GSTINs where Provisional attachment made under section 83 of CGST Act
Within jurisdiction
Outside Jurisdiction
 

 

Total no. of GSTINs

 

 

Total amount of ITC blocked

1 2 3 4(2+3) 5 6 7a 7b 7c 7d 7e 8 9 10a 10b 11 12

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-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:

GSTIN of the non- existent supplier, along with Name & Address GSTIN of the recipient Name & Address of the recipient(s) Tax amount/ ITC involved (in Rs Lakhs)
CGST SGST IGST Cess Total
1 2 3 4 5 6 7 8

(4+5+6+7)

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:

Annexure – C

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

Name of the State/ CGST Zone: Date of submission:
S. No.
GSTIN
Legal Name/ Trade Name
Tax involved as estimated by GSTN/ DGARM/ tax administration (Rs. In Lakhs)
Was the lead correct? (Y/N)
If lead not correct, reason. (Choose one from – a/ b/ c/d) #
Action on GSTIN Registration (Suspended/ Cancelled/ No Action)
Detected tax amount (Rs. In Lakhs)
Recoveries made till date (Rs.)
Remarks
1 2 3 4 5 6 7 8 9 10

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.

*****

The author can be reached at gstrfbharat@gmail.com His Mobile no. is +91-9891112120.

DISCLAIMER: This publication is merely a general guide meant for knowledge purposes only. All the references or content are for educational purposes only and do not constitute legal advice. We do not accept any liabilities whatsoever for any losses caused directly or indirectly by the use/reliance of any information or conclusion contained in this publication. Prior to acting upon this publication, you’re suggested to seek advice. This work is entirely in the interest of the profession and to contribute to my beloved subject GST.

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