The Assam Goods and Services Tax (GST) Department, on 7th July, issued a circular to combat fraudulent registrations and tax evasion. They now require individuals or organisations to provide a valid rental agreement or lease deed when registering for GST.
The department discovered that several dishonest people and organisations were obtaining GST registration by submitting fake documents, including fake rental agreements and electricity bills.
Once registered, these fraudulent parties would generate fake invoices without actually providing any products or services. Such practices allow them to create a network of fictitious input tax credits (ITC) and cheat the government exchequer, resulting in significant government revenue losses.
To tackle this issue, the department has made it mandatory for the registering authority to verify the authenticity of the rental agreement or lease deed. It must be duly registered with the Sub-Registrar or another competent authorised authority. These measures aim to prevent registration fraud and protect the government’s revenue. Non-compliance with these guidelines will have consequences, as warned by the department.
During the 50th GST Council meeting on July 11, 2023, it was recommended that the CGST Act be amended to prevent fake registrations. Vivek Johri, Chairman of the Central Board of Indirect Taxes and Customs (CBIC), emphasised the implementation of a stringent registration process to prevent fraudulent GST registrations. The chairman also highlighted the importance of physical verification requirements.
Another significant decision by the finance minister is to include the GSTN in the Prevention of Money Laundering Act, of 2002. However, the revenue secretary, Sanjay Malhotra, clarified that this decision was unrelated to any modification of the Goods and Services Tax Network (GSTN).
