In the past four months, the commercial taxes department has identified about 285 newly GST-registered taxpayers who have obtained false registrations by presenting fake documents.
These illegal registrations have been found in commodities which are considered as ‘evasion prone’. These cases were identified while conducting physical verification, and in all these cases, taxpayers were not existing.
Many instances of fraud were detected after the implementation of GST. Hence, for the first time ever, the department initiated physical verification to find out about fake GST registrations.
The physical verifications were initiated across trades which include granite, areca, readymade garments, marbles, tiles, iron, steel, cement, timber, plywood, hardware, automobile parts, electrical and electronic goods, and many others.
M.S. Srikar, the Commissioner of Commercial Taxes, mentioned that based on prior experience, the department decided to verify the address, identity, and proof of new registrations physically across evasion-prone commodities.
He also added that during the inspection which was done from April to July, out of 4,935 dealers, 285 taxpayers obtained their registrations by presenting fraudulent documents. The commissioner confirmed that steps have already been initiated to cancel the fake registrations.
Furthermore, the commissioner added that in the last two years, around 43,300 registrations had been cancelled by the department. This is inclusive of fake registrations as well as tax defaulters.
Under the GST mechanism, a new taxpayer is granted with registration in less than three working days. Registration is granted without the verification of the documents that are uploaded by the taxpayer, and the business premise will not undergo a physical verification too.
This facility was actually extended to taxpayers to help them operate their businesses without much hassle. However, taxpayers misused this option, and multiple cases of fake e-way bill and illegal input credit were identified.
M.S. Srikar mentioned that going forward physical verification would remain for all new registrations. The National Informatics Centre (NIC) has also developed an exclusive android app to help officers in uploading information.
He also added that the department would be taking necessary action against taxpayers who have made purchases via non-existent taxpayers to prohibit input tax credit claims.
The commercial taxes department is now focussing on the commercial properties located in Bruhat Bengaluru Mahanagara Palike region to increase the GST revenue collections in the State. The department has got information of around one lakh commercial properties on the basis of the property tax details.
Rent or lease on a property will attract 18% tax under the GST regime. The department has started to verify these commercial properties to interpret the compliance rate. He added that the officials would be getting the transaction registration information from the registration department. PAN will help the department in monitoring tax compliance better.