Drive Against Fake GST Registration

May 15, 2023

In a bid to combat GST fraud and protect government revenue, the Centre and States have initiated a two-month special drive. The drive, which commenced on May 16, 2023, and will run until July 15, 2023, aims to detect suspicious and fake GSTINs (Goods and Services Tax Identification Numbers) and take appropriate action to eliminate fraudulent billers from the GST ecosystem.

Detecting Suspicious/Fake GSTINs

The primary objective of the special drive is to identify suspicious and fake GSTINs, which are being used to engage in fraudulent activities within the GST ecosystem. By conducting thorough verification and analysis, tax authorities aim to weed out billers who are misrepresenting their transactions or engaging in tax evasion. This proactive approach will help protect the government’s revenue and ensure the integrity of the GST system.

Magnitude of Registered Taxpayers

Currently, there are 1.39 crore registered taxpayers under the GST regime. This significant number highlights the scale and complexity of managing the GST system. With such a vast taxpayer base, it becomes crucial to conduct periodic drives to identify and address any potential fraudulent activities.

Tackling GST Evasion

The drive comes as a response to the alarming rise in GST evasion. In FY23, tax officers detected over ₹1.01 lakh crore worth of GST evasion. This substantial amount emphasizes the need for proactive measures to counter fraudulent practices and ensure compliance. The Directorate General of GST Intelligence (DGGI), the investigative agency under the GST regime, plays a crucial role in detecting and addressing GST evasion cases.

Previous Detection and Recovery Efforts

In FY22, DGGI successfully detected evasion worth over ₹54,000 crore and recovered over ₹21,000 crore in taxes. This underscores the effectiveness of specialized agencies in identifying and tackling tax evasion. The increasing number of GST evasion cases, with about 14,000 cases detected in FY23, highlights the need for continued vigilance and targeted initiatives to curb such practices.

Role of GSTN and Verification Drive

The Goods and Services Tax Network (GSTN) will play a pivotal role in the special drive. Using detailed data analytics and risk parameters, GSTN will identify fraudulent GSTINs for both state and central tax authorities. These identified suspicious GSTINs will be shared with the respective tax administrations for conducting verification drives and taking necessary actions. This collaborative approach will help strengthen the enforcement mechanism and deter fraudulent activities within the GST ecosystem.

Monitoring and Oversight

The progress of the special drive will be monitored by the National Coordination Committee, led by a Member from the Central Board of Indirect Taxes & Customs (CBIC). This committee comprises Principal Chief Commissioners and Chief Commissioners from Delhi and Bhopal CGST Zones, along with Chief Commissioners and Commissioners of State Tax from Gujarat, West Bengal, and Telangana. This monitoring ensures the drive’s effectiveness and enables timely intervention, if required.

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