Traders and retailers have praised the Central Board of Indirect Taxes and Customs (CBIC) initiative to find out bogus GST registrations and make offenders pay for the deed. Fake registrations are used to submit invoices for the input tax credit (ITC) even in the cases of not offering delivery of goods or services.
The ‘Special All-India Drive‘ to track fake GST identification numbers (GSTINs) came into action on May 15 and will be operating till July 15. The CBIC, earlier this month, had stated that the cases of fake registrations and the issuance of bogus invoices for passing fake ITC have become a serious problem, wherein fraudsters engage in doubtful and complex transactions, leading to revenue loss to the government.
It is a praiseworthy move by tax officials to weed out fraudsters from the GST ecosystem, said Praveen Khandelwal, Secretary General at the Confederation of All India Traders (CAIT), which represents almost 8 crore traders across more than 40,000 trade associations throughout the nation.
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Khandelwal said that a few of these individuals have a history of causing harm to the greater business community. They cause problems for retailers and dealers who follow the GST rules and limit market competition. Since modern business information is technologically connected to the GST system, tax officers would have no trouble apprehending fraudsters. The government should make sure that decent enterprises do not suffer in the process.
The action should be prospective rather than retrospective, according to Sanjeev Mehra, president of the Delhi-based Khan Market Traders Association. The authorities shouldn’t demand that customers who bought goods from these companies pay additional GST in order to apprehend such violators.
Mehra continued by saying that the measure is beneficial not just because such fraud practitioners harm other enterprises but also because their fraudulent activities compel the government to demand tougher compliance, which makes it challenging for legitimate companies to conduct business. The business climate will improve if such dishonest dealers are eliminated from the system.
Tax inspectors discovered GST evasion worth more than Rs. 1.01 lakh crore in the nation during the financial year 2022–23, almost doubling from FY22, while the officers of the Directorate General of GST Intelligence (DGGI) made a recovery of Rs. 21,000 crore in FY23, according to a PTI report from April.
From 12,574 cases in FY22 and 12,596 cases in FY21, the overall number of GST evasion cases grew to almost 14,000 in FY23.
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Rajeev Batra, owner of Kiddies Centre in Delhi’s Chandni Chowk market and president of the Rajdhani Cycle Dealers Association, said shopkeepers and traders were afraid of harassment before the drive began. Kiddies Centre manufactures children’s tricycles, strollers, walkers, and other items. According to Batra, no reports of official harassment or licence cancellation have surfaced to date.
According to Khandelwal, if a fraudulent registration is found, a show cause notice should be released, and the business should be given time to respond as per the law.
