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GST transactions worth Rs 1 lakh crore are being investigated


The General Directorate for Risk Analysis and Management (DGARM), which extracts data from the goods and services tax (GST) to expose tax evaders, has compiled a list of more than 12,900 business entities, including some large companies and export companies. who are suspected of having taken advantage of the data. Tax credit (ITC) via false invoices worth more than Rs 1 lakh crore from July 1, 2017, when the new indirect tax regime was launched, people familiar with the development said.

The DGARM has captured thousands of suspicious transactions made by commercial entities between July 1, 2017 and March 31, 2020 and has shared the data with investigating agencies for action. Based on those inputs, the government launched a massive crackdown on GST fraud three weeks ago, arresting 104 people, said three officials, who requested anonymity.

“The data [provided by DGARM] it involves names of some big companies and star exporting houses, ”said one of the officials, without specifying names because the investigations that would determine the real guilt of such entities are still ongoing.

“Possibly, some of these major companies could be inadvertent victims of false invoice supply chains. The agencies will first know the facts before taking action against them, ”said the official.

A preliminary estimate suggests that rogue individuals and bogus business entities have defrauded the government of more than Rs 1 million lakh in GST revenue since July 2017, a second official said.

While the exact value of the GST fraud committed by these 12,900 entities cannot be immediately determined because the matter is still under investigation, in response to a question in the Lok Sabha on March 2, 2020, the minister of state for finance Anurag Singh Thakur quantified the total GST-related evasions at Rs 70,206.96 crore between July 2017 and January 2020. Of that, Rs 34,591.21 crore had already been recovered.

West Bengal Finance Minister Amit Mitra in August last year wrote a letter to Union Finance Minister Nirmala Sitharaman, in which he said that the total GST fraud could have already crossed the 1 lakh rupee mark. crore since July 2017. HT reported this on August 29, 2019.

“DGGI enforcement agency [the Directorate General of GST Intelligence] it has already started to act with encouraging results, ”said the second official. A nationwide campaign, launched about three weeks ago, has resulted in more than 100 arrests and 1,161 cases have been recorded against 3,479 bogus entities that obtained the GST registration fraudulently. These bogus entities were illegally taking advantage of or transmitting input tax credits, he added.

This is the reason why the government has decided to physically verify all entities that obtained the GST registration considered without providing details of Aadhaar between August 21, 2020 and November 16, 2020, a third official said. “It is found that most of these entities do not have real businesses and some of them are not available at their registered addresses. They took advantage of the simple registration process to generate false invoices and misappropriate an ITC entry tax credit worth billions [of rupees], “he said. Currently, the GST law allows for considerate registration 21 days after an application is submitted.

Experts said the government should control tax evasion without exaggeration. Abhishek A Rastogi, a partner at the law firm Khaitan & Co, said: “The government is working on a war footing to track down taxpayers who may have deliberately or unintentionally used unacceptable credit. While this move will track many instances where credit may have been taken improperly, there is a possibility that many genuine transactions will need to go through detailed scrutiny. Accordingly, it is recommended that companies be very careful and perform due diligence when purchasing supplies from suppliers. ”Rastogi has been arguing several petitions about these false invoice issues.

The officials mentioned above justified the action to punish the dishonest. According to a circular issued by the finance ministry on January 23, all central GST field formations were asked to complete in 14 days the verification of all non-existent exporters found monetizing credit through GST reimbursement integrated into exports of goods. In most cases, the exporters were found to have claimed the ITC based on false invoices and the IGST on exports was paid using the ITC, according to the circular, officials said.

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