Edited by Deepali Verma
Goods and Services Tax (GST) authorities have come across 4,153 bogus firms engaged in suspected evasion of input tax credit (ITC) amounting close to Rs 12,036 crore during October-December 2023, the Ministry of Finance informed via a statement on January 7. While Maharashtra holds the top spot among 36 states and union territories (UT) with the highest number of 926 bogus firms having undertaken suspected tax evasion of amount Rs 2,201 crore, the evasion incidence, in a surprising turn of events, has managed to be higher in Delhi with Rs 3,028 crore of suspected tax evasion by 483 bogus firms.
Glancing at the fake firms per lakh registered firms, Haryana tops among the states/UTs with 81 bogus firms per lakh registered firms, then Delhi with 61 fake firms per lakh registered firms, Rajasthan having 59 such firms per lakh registered firms and Maharashtra with 54 fake firms per lakh registered firms.
The total 4,153 bogus firms detected during the October-December quarter had 2,358 detected by Central GST authorities. “This has helped in guarding revenue of Rs 1,317 crore, out of which Rs 319 crore has been realised and Rs 997 crore has been protected by blocking input tax credit,” the Ministry statement further informing that overall 41 persons have been arrested in these cases, of which 31 arrests were carried out by Central GST Authorities.
GST authorities falling under the Central Board of Indirect Taxes and Customs (CBIC) along with state/UT governments have undertaken action against bogus firms to eliminate frauds and increase compliance. Tax authorities have also been involved in undertaking special drives on the issue of non-existent/bogus registrations and issuance of fake invoices without any underlying supply of goods and services.
The special drive to combat fake registrations under GST began in mid-May last year. In April last year there were several such instances reported of evasion by bogus firms such as a company showing manpower supply from Gujarat to Bihar for services, instead of supply of goods, to avoid generating e-way bills which are mandatory for inter-state transportation of goods worth over Rs 50,000. Instances of Aadhaar of businesses getting linked to mobile numbers of random individuals, who then started getting OTPs, multiple GST registrations originating from the same premise, with fake documents produced in many of these cases were also reported. These instances caught the radar of tax authorities under the GST regime, prompting them to conduct a special drive against registration-linked frauds in 2023-24 after discussions being held at the top level in the government.
A total of 29,273 bogus firms who were part of the suspected Input Tax Credit (ITC) evasion of Rs 44,015 crore have been detected, the Ministry informed. “This has saved a sum of Rs 4,646 crore of which Rs 3,802 crore is by blocking ITC and Rs 844 crore is by way of recovery. 121 arrests have been made in the cases,” it said.
There are no major GST rate tweaks expected before the general elections, which are likely to happen in the next few months. Therefore, in a bid to bolster revenue collections, tax authorities have made note of registration-linked frauds as one of the key focus areas for tighter scrutiny in the financial year 2023-24. The government has employed several measures for the GST registration process. Pilot projects of biometric-based Aadhaar authentication at the time of registration saw its launch in the states of Gujarat, Puducherry and Andhra Pradesh.
The government is working to curtail evasion such as sequential filing of GST returns, system generated intimation for reconciliation of the gap in tax liability in GSTR-1 & GSTR- 3B returns and of the gap between ITC available as per GSTR-2B and ITC availed in GSTR-3B returns, usage of data analytics and risk parameters for detecting fake ITC among others.
