Second all-India drive against fake GST registrations to begin on Aug 16

Tax officers will launch a two-month long special drive against fake GST registrations on August 16, the Central Board of Indirect Taxes and Customs (CBIC) has said.

With the detection of close to 22,000 fake registrations involving suspected GST evasion of over Rs 24,000 crore in the first such drive in May, last year, the National Coordination Committee, comprising senior Centre and state tax officers, last month decided to launch a second special drive "to clean up the tax base".

Under the special drive, GST Network, in coordination with Directorate General of Analytics and Risk Management (DGARM), CBIC, will identify suspicious/ high-risk GSTINs, based on detailed data analytics and risk parameters. Such information would be passed on to the jurisdictional tax officer for further verification.

The Centre and State GST officers will then undertake a time-bound verification of the suspicious GSTINs (GST identification number). If it is found that the GSTIN is fictitious or nonexistent, the tax officer will initiate action for suspension and cancellation of the registration and blocking of input tax credit (ITC).

"The second Special All-India Drive may be launched by all Central and State Tax administrations from 16th August 2024 to 15th October 2024 to detect suspicious/ fake GSTINs and to conduct requisite verification and further remedial action to weed out these fake billers from the GST eco-system and to safeguard government revenue," the CBIC said in an instruction to field formations.

Under GST, entities take fake registration for the purpose of fraudulently claiming ITC by issuing bogus invoices.

The CBIC also asked field offices to take steps to identify the masterminds/ beneficiaries behind such fake GSTIN for further action, wherever required, and also for recovery of government dues and/ or provisional attachment of property/ bank accounts, etc.

Tax officers will have to mention in the action taken report if he/she detects any novel modus operandi during the verification/ investigation.

The unique modus operandi found during this special drive will be compiled by the GST Council Secretariat and will be subsequently shared with Central and State Tax administrations across the country, it added.

In the first drive between May 16, 2023 to July 15, 2023, against fake registration, a total of 21,791 entities (11,392 entities pertaining to state tax jurisdiction and 10,399 entities pertaining to CBIC jurisdiction) having GST registration were discovered to be non-existent.

An amount of Rs 24,010 crore (state - Rs 8,805 crore + Centre - Rs 15,205 crore) of suspected tax evasion was detected during the special drive.