CBIC vide Instruction no. 01/2023-GST dated 4th May, 2023 issued guidelines for the Special All-India Drive against fake registrations under GST.
The following points were specified in the above mentioned instruction;
- As per the above guidelines Government specified that the matter of fake GST registrations for the fraudulent use of GST inputs were discussed during the National Co-ordination meeting of the State and Central GST officers held at New Delhi on 24th April 2023.
- Various instances have been exposed by the Central and State authorities where fake registrations were obtained to divert the ITC to evade taxes. There were some cases where forged electricity bills and other admissible property documents were used to obtain the GST registration.
- In another case in Gujarat it was found that the PAN and Aadhaar used for GST registration belonged to an individual who was from economically weaker section and was completely unaware about the same. Further the phone numbers on the Aadhaar cards were fraudulently modified at the nearest Aadhaar Centre by paying a nominal cash amount to these persons for using their thumb at the Aadhaar Seva Centers.
In the meeting ;
- It was further discussed that there is a need of a systematic procedure to tackle these fake registrations and fake ITC distribution.
- It was decided special drive should be launched at the nation wide level to detect such cases and to conduct requisite investigation to prevent further loss of revenue to the Government.
- It was decided that during the special drive, some common guidelines will be issued to ensure consistency and co-ordination in the action.
The following guidelines are being issued in order to take firm action on dealers holding fake registrations;
i. Period
The specified period for launching of a Special All India Drive may be launched during the period 16th May 2023 to 15th July 2023 to detect the fake GST registrations and to conduct investigations and remedial actions required to eliminate these fake GST Bills and loss to the Government revenue.
ii. Identification
- Based on the detailed data analysis and risk parameters GSTN will identify such fraudulent GSTINs for State and Central Tax Authorities.
- GSTN will share the details of identified suspicious GSTINs with the concerned Central/State authorities for initiating the investigation.
- Various tools that will be used for data analytics are 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.
iii. Information Sharing
For the purpose of sharing the information a Nodal Officer shall be appointed by each of the Zonal CGST Zone and state to ensure seamless flow of data and for coordination between the authorities.
The name, designation, contact number and email id of such Nodal Officers appointed 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 and make them available to all the tax administrations, GSTN and DGARM (Directorate General of Analytics and Risk Management) whenever 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.
iv. Action to be taken
If after the investigation it is found that the taxpayer is fake, the GST officer in accordance with the provisions of section 29 of CGST Act may initiate an action for suspension and cancellation of the registration.
v. Further course of action
- As per the provisions of Rule 86A of CGST Rules ITC lying in the ledgers may be blocked. The details of the taxpayers to whom the credit has been passed out may be identified with the help of GSTR-1 filed.
- In case the recipient of the ITC pertains to the same jurisdiction of the said tax authority itself, suitable actions for the demand and recovery of the ITC wrongly availed may be initiated.
- In case the recipient GSTIN pertains to the different jurisdiction, the details of the case along with all relevant documents and evidences may be sent to the concerned tax authority in the format enclosed as Annexure B through the Nodal Officer.
- Necessary actions may also be taken to identify the masterminds/beneficiaries behind such fake GST registrations and for the purpose of the recovery of the Government dues provisional attachment of property/bank accounts may be initiated as per the Section 83 of CGST Act. Further the similar actions may be taken against any associated suspicious GSTIN if detected.
vi. Feedback and Reporting
Each State and CGST Zones will provide an action taken report to GST Council Secretariat on weekly basis on the first working day after the completion of the week in the enclosed Annexure-A. If any suspicious approach is detected during the investigation process, the same may also be indicated in the said action report. On the conclusion of this special drive GSTIN wise feedback on the result will be provided by the field formations to GSTN/DGARM, in the format attached in Annexure-C.
vii. Monitoring of special drive
- A National Coordination Committee headed by the Member (GST), CBIC and Principle Chief Commissioner/s of Delhi and Bhopal CGST Zones and Chief Commissioner/s of State Tax Gujarat, West Bengal and Telangana shall monitor the progress of this special drive.
- For this purpose National Coordination Committee will meet periodically. GST Council Secretariat will act as the Secretariat of this Committee. The Committee will also be assisted by GSTN and priciple commissioner, GST Policy Wing, CBIC.
GST Council Secretariat will compile the reports recieved by various Authorities and make it available to the National Coordination Committee.
Annexure – A
Annexure-B
Annexure-C