The Goods and Services Tax (GST) authorities have cancelled more than 1,60,00 GST registrations in October and November 2020 of who defaulted on filing monthly tax returns for more than six months. Also, the department identified more than 28,000 taxpayers for cancellation of registration for default in filing monthly GSTR-3B for more than six months as on 01.12.2020.
The strict action for default in filing monthly GSTR-3B is taken as part of a drive to improve tax compliance amid a sharp decline in tax receipts. Directorate General of GST Intelligence (DGGI) and Central GST officials have been on a compliance enforcement drive from November 2020 focusing on frauds involving fake invoices.
As part of this, more than 100 persons have been arrested, including for dealing in tax credits wrongfully. Also, the officials have booked more than 1,400 cases against more than 4,500 fake registered entities across the country.
The officials identified that 55 taxpayers got deemed registrations without Aadhaar authentication between 21.08.2020 and 16.11.2020 and few discrepancies have been noted in their case.
The fake invoices generated using fake GST registrations are used for many violations including tax evasion, funds diversion and money laundering. These are also used for showing non-existent business transactions in the book of companies to rise figures and obtain loans from banks.
The direct and indirect tax authorities have been scaling up the use of technology and using data analysis to identify businesses with a poor compliance track record. As there is a sharp reduction in tax revenues this year, the trend is expected to gain further momentum.
The government has previously introduced Aadhaar authentication for taking GST registration to check the practice of setting up fictitious firms for fraud. The businesses taking GST registration without Aadhaar authentication should undergo physical verification of the business premises.
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DVSR Anjaneyulu known as AJ, is a Chartered Accountant by profession. Loves to listening to music & spending time with family and friends.