First Week of All India GST Drive reveals 10000 Fraud Registrations

Clipped from: https://www.taxscan.in/first-week-of-all-india-gst-drive-reveals-10000-fraud-registrations/281347/

In the first week of the joint drive, tax officials have identified around 10,000 illegitimate GST registrations, according to sources. The verification process jointly conducted by the State and Central Goods and Services Tax Authorities revealed instances where forged documents such as electricity bills, property tax receipts, and rental agreements were used to establish a principal place of business for obtaining GST registration.

The exact extent of the counterfeit input tax credit is yet to be determined. An initial estimate suggests it exceeds ₹25,000 crores, although final figures will be available at the conclusion of the operation.

The cases chosen for physical verification were identified using data analytics and risk parameters by GST Network (GSTN), which assists state and central tax authorities in identifying potential fraudulent GSTINs.

However, certain concerns have been raised by small-scale industry associations, particularly regarding the impact on companies utilizing co-working spaces. Representatives from Forum for Internet Retailers, Sellers, and Traders (FIRST), India, voiced concerns that officers conducting the GST verifications are demanding physical records and the presence of employees or directors.

This approach may disproportionately affect genuine small-scale sellers who register their business locations as their chartered accountant’s premises or co-working spaces to benefit from cost advantages and ensure better compliance. In response to these concerns, the source clarified that the verifications were not search operations but rather a process of confirming physical addresses.

Cancellation actions will only be taken following careful consideration and due diligence. ————-