GST authorities to roll out biometric-based Aadhaar authentication of suspicious registration applicants

GST Administration will soon begin a pilot for risk-based biometric-based Aadhaar authentication of suspicious registration applicants in Puducherry. Meanwhile, Revenue Secretary Sanjay Malhotra has said special joint drive against fake registration may be extended beyond July 15, to complete the investigations against suspected ones.

Biometric-based Aadhaar authentication is one tool to check fake applicants. For long, tax authorities have been using OTP-based authentication for establishing identity of applicants. According to Central Board of Indirect Taxes & Customs (CBIC), tax officials are now going to go in for biometric authentication under which person in suspicious cases will be asked to go to an Aadhaar centre to have his biometrics verified to ascertain his identity.

This step has been initiated after several cases of obtaining fake registrations were detected by Central and State Tax administrations. In one such recent case detected by Gujarat State Tax authorities, it was found that a few fraudsters had obtained fake GST registrations on the basis of PAN and Aadhaar number of persons from economically weaker sections without their knowledge.

Fraudulent modifications

It was revealed that phone number on the Aadhaar cards of these persons were fraudulently modified. They were lured by offering them money and false promises of benefits under government schemes. The conmen then took them to the nearest Aadhaar Seva Centre and got their Aadhaar Cards linked to a dummy mobile number by using their thumb impressions.

After such cases came to light, the GST Council earlier this week recommended a pilot to be conducted in Puducherry for risk-based biometric-based Aadhaar authentication of registration applicants. “Andhra Pradesh also expressed its intent to join this pilot after the system’s readiness is tested in Gujarat and Puducherry,” a Finance Ministry statement issued post Council meeting said.

The council also recommended details of bank account, name and PAN of the registered person to be furnished within 30 days of grant of registration or before filing of statement of outwards supply in GSTR 1. If not done, he will not be allowed to file GSTR 1 and registration will be suspended which can be revoked only after compliance.

The Council also prescribed a mechanism to do away with the requirement that the physical verification of business premises is to be conducted in the presence of the applicant and also to provide for physical verification in high risk cases even where Aadhaar has been authenticated.

Special drive

Meanwhile, Revenue Secretary Malhotra informed that during a special joint drive, started on May 16, around 70,000 registered were found suspicious based on data analytics. However, nearly 62,000 of the registrations were verified and around 18,000 were found bogus. There is an apprehension that these bogus firms caused a loss of ₹17,000 crore to exchequer by way of fraudulent use of ITC.

Now will drive be extended? Malhotra said verification of some 8,000 registrations or more is pending. “If they are completed in this last week, then we may not have to extend it, but my sense is that we may not be able to complete it because they are actually concentrated in a few States. So, we may have to extend it to complete the verification,” he said.

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