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Fake GST Registrations in Evasion-prone Commodities

GST Registrations

In the past four months alone, the Commercial Taxes Department has found that 285 newly registered taxpayers have acquired GST registrations across a dozen commodities, considered evasion-prone, such as readymade garments, granite, cement, automobile parts, and hardware by submitting false or forged documents. In all of these cases, which were found during physical verifications, the taxpayers were non-existent. In light of numerous instances of fraud detected post-GST, for the first time, the department had deployed physical verification to identify such fraudulent GST registrations.

Across Various Trades

The physical verifications had been done across several trades including, electrical and electronic goods, iron and steel, plywood and timber, among other things. The Commissioner of Commercial Taxes, M.S. Srikar said, “Based on our past experience, we decided to physically verify the proof and address of new registrations in evasion-prone commodities.”

“Of the 4,935 dealers inspected between April and July, we found 285 taxpayers obtaining registrations by submitting false or fabricated documents. Some taxpayers did not exist too”, he added. He also noted that steps have been initiated to cancel these registrations.

The department has also canceled 43,400 registrations, including tax defaulters and bogus registrations, in the past years. Since the implementation of GST there have been in total about 3 lakh new registrations, amounting to 8 lakh registered taxpayers in the State from about 5 lakh in the VAT era.

Under the GST regime, the registrations for new taxpayers are approved within three working days without any physical verification of the business premises and without confirming the authenticity of documents provided by taxpayers. In this matter, the commissioner added, “The facility was extended to have ease of doing business. However, we found several cases of bogus e-way bill and input credit among others being created.”

Physical Verification

He said that the physical verification would continue for all new registrations, and NIC has developed an exclusive android app to enable officers to upload information. He mentioned that the department has been taking action against those taxpayers who have purchased from non-existent taxpayers to disallow the input tax credit (ITC) claims.

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