10,000 Fake GST Registrations Identified During the First Week Of The Special Drive by CBIC

Recently, the Central Board of Indirect Taxes and Customs (CBIC) has initiated a special all-India drive against cases of fake GST registration. During the first week of the initiation, central tax and state tax officers successfully unearthed 10,000 bogus GST registrations in a joint exercise.

The campaign against fraudulent invoices and GST registration started on 15th May 2023 and will continue until 15th July 2023. Officers are visiting the premises registered with the tax authorities before taking further actions. During the process, officers noticed forged electricity bills, property tax receipts, and rent agreements being used as supporting documents for obtaining GST registrations.

The total amount of input tax credit fraudulently passed on or availed by such fake registrations is yet to be ascertained, which may be roughly estimated above Rs.25,000 crore, a GST official reported to a media house.

Small companies registered under GST and using co-working spaces of larger counterparts that are falling under the taxman’s radar are complaining of operational hassles due to these developments.

GST officials are checking physical records and looking for the presence of employees and/or directors of GST Identification Numbers (GSTIN) under their lens. 

Shri Vinod Kumar, President of Forum for Internet Retailers, Sellers, and Traders (FIRST), opined that those registrants who specifically sell online face issues in such cases. 

Most of them declare co-working spaces or chartered accountant’s offices as the principal place of business, considering the savings in operational costs. In such cases, the search activity by officers leads to hassles. 

The intention of verification of the physical place of business is to check if the business is genuinely being conducted as declared. However, the tax authorities are conducting due diligence before cancelling GST registration.

The officers select potentially fraudulent GSTINs based on the risk parameters pre-defined based on data analytics run by the GST Network (GSTN). The CBIC had also issued a detailed instruction on 4th May 2023 to its officers defining the process to be followed while conducting the drive.

For any clarifications/feedback on the topic, please contact the writer at annapoorna.m@clear.in