Tax officials unearth Rs 19,492 crore GST evasion via special drive

A nationwide crackdown by the goods and services tax (GST) authorities has helped uncover tax evasion to the tune of Rs 19,492 crore. The two-month special drive, which concluded on July 15, was part of the tax authorities’ efforts — both at the central and state levels — to combat tax evasion by scrutinising fake GST registration and catch offenders. 

Such fraudulent activities have resulted in the blockage of fake input tax credit claims worth Rs 6,200 crore, a senior government official told Business Standard. 

Tax recovery in detected cases is currently around Rs 79 crore and an investigation in this connection is still on. “The special drive, which was launched on May 15, was being run jointly by the Centre and states. We verified a total of 69,286 GST registrations, of which 20,862 were found ‘non-existent’,” said the official cited above. 

The department learnt to have detained 7-10 alleged beneficiaries of fake tax claims. This figure is likely to increase, officials hinted. There are now 13.9 million registered GST payers.

The government has been using data analytics and artificial intelligence to identify and track risky taxpayers. Data is being shared with other law enforcement agencies to detect cases of tax evasion. Mandatory Aadhaar-based authentication for new GST registrations and centralised suspension of registration of businesses that default in the timely filing of returns are being enforced to curb fake registration.

The GST collection mop-up has been consistently surpassing the Rs 1.5-trillion mark. The collection for May, which was reported in June, reached Rs 1.61 trillion, the second-highest collection in the past 14 months. The highest-ever monthly collection of Rs 1.87 trillion was reported in April this year.

Still, cases of GST evasion are on the rise with about 14,000 cases detected in 2022-23, up from 12,574 in 2021-22, and 12,596 in 2020-21.

During the “Special All-India Drive”, suspicious/ fake GSTINs were detected, following which tax officers conducted requisite verification and took further remedial action to weed out these fake billers from the GST eco-system.

This was the second such exercise the government initiated after August 2020. The August 2020 campaign of the Central Board of Indirect Taxes and Customs was to deal with this surge of fake billing and fake invoicing. During the earlier exercise, around 24,000 fake GSTINs and false tax credit claims of Rs 63,000 crore were detected. 

Around 8,000 cases were booked during that drive.

Fake/non-genuine registrations are being used to fraudulently pass on input tax credit (ITC) to unscrupulous recipients by issuing invoices without any underlying supply of goods or services, or both.

This menace of fake registrations and issuance of bogus invoices for passing fake ITC has become a serious problem, wherein fraudulent people engage in dubious and complex transactions, causing revenue loss to the government, the CBIC had said while launching the drive.