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The law panel of the GST Council will meet on Wednesday to consider ways to curb fake invoices. Based on the recommendation, the Council will take a final decision.
The panel has tax officers with 10 members each from the Centre and the State, along with two members from the GST Council and one from GSTN.
Senior Finance Ministry officials said the Committee would deliberate on measures required to plug loopholes in the law, which are being exploited by the unscrupulous elements to defraud the exchequer. It is believed that the Finance Ministry is in the process of plugging these gaps in the GST registration process to ensure that only genuine businesses get a GST registration.
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“The businesses, whose owners or promoters do not have commensurate financial track record like filing of income tax returns and payment of income tax to the Government, may require detailed physical and financial verification by tax officers, before their companies can be considered for GST registration,” a senior official explained. Further, the provisions related to deemed registration under GST law may also be tightened to prevent misuse of such provisions by fake dealers.
Besides, the provisions related to suspension and cancellation of registration may also be streamlined to make it efficient and faster, so that such fraud operators are prevented from continuing to pass on fake credit down the chain, added another official.
He explained that data analytics techniques will be used to identify such taxpayers who are suspected to be indulging in fraudulent activities and a coordinated action is likely to be taken against such elements by suspending their registration, followed by detailed physical and financial verification by field officers to check genuineness of their operations, before they are allowed to reuse their registration. The Committee will work out the detailed modalities for the same.
This meeting is part of the nation-wide drive against the GST fake invoice frauds, under which in the last four days, the Directorate General of GST Intelligence (DGGI) has arrested 25 persons including two professionals, identified about 1,180 entities and booked 350 cases against unscrupulous elements involved in availing and passing on of ineligible input tax credit (ITC) fraudulently. The crackdown which was carried out from November 9 to 13 has been resumed on Monday.
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