In a remarkable demonstration of collaborative efforts, tax enforcement authorities from both the central and state governments have taken swift and decisive action against tax offenders. Their vigilant crackdown has already yielded significant results, as an astounding number of over 10,000 fraudulent Goods and Services Tax (GST) registrations were unearthed during the inaugural week of their joint operation. As highlighted in a report by the esteemed Economic Times, the concerted campaign to combat deceitful invoices and illicit registrations commenced on May 15 and will persevere until July 15.
In furtherance of the initiative, officials are meticulously validating addresses through in-person visits, prior to implementing any measures against any individual or organization.
In numerous instances, the officials discovered the utilization of fraudulent rent agreements, property tax receipts, and electricity bills to obtain GST registration, as highlighted in the report. However, the precise extent of the counterfeit input tax credit received remains undetermined. According to an official cited in the report, “It is premature to provide specific figures at this point, but initial estimations suggest it exceeds ₹25,000 crore.”
To counteract these deceptive practices, the GST Network (GSTN) is being employed to scrutinize fabricated addresses. GSTN equips central and state officials with data analysis and risk parameters, enabling them to identify cases warranting physical verification.
The report acknowledges that the crackdown has garnered some criticism, particularly from small-scale enterprises that rely on co-working spaces. President Vinod Kumar of the Forum for Internet Retailers, Sellers, and Traders (FIRST) voiced concerns to ET, stating that GST officials are demanding physical records and the presence of employees and/or directors.
To ensure enhanced compliance and cost benefits, online sellers often designate their business locations as their Chartered Accountant’s premises or co-working spaces. However, the aforementioned concern was dismissed by an official quoted in the ET report, assuring that authorities exercise thorough due diligence prior to taking any action.