29,273 bogus firms, GST evasion of Rs 44,015 crore detected since May ’23

Out of the total 4,153 bogus firms detected during the October-December quarter, 2,358 were detected by Central GST authorities. “This has helped protect revenue of Rs 1,317 crore, out of which Rs 319 crore has been realised and Rs 997 crore has been protected by blocking input tax credit,” the Ministry statement said, adding that overall 41 persons have been arrested in these cases, of which 31 arrests were by Central GST Authorities.

GST authorities under the Central Board of Indirect Taxes and Customs (CBIC) along with state/UT governments have been undertaking action against bogus firms to curb frauds and increase compliance. Tax authorities have undertaken special drives on the issue of non-existent/bogus registrations and issuance of fake invoices without any underlying supply of goods and services.

The special drive against fake registrations under GST began in mid-May last year. The Indian Express had reported in April last year about several such instances of evasion by bogus firms such as a company showing manpower supply from Gujarat to Bihar for services, instead of supply of goods, to avoid generating e-way bills which are mandatory for inter-state transportation of goods worth at over Rs 50,000. There were also instances of Aadhaar of businesses getting linked to mobile numbers of random individuals, who then started getting OTPs, multiple GST registrations originating from the same premise, with fake documents produced in many of these cases. These instances of frauds came under the radar of tax authorities under the GST regime, prompting them to initiate a special drive against registration-linked frauds in 2023-24 after discussions having taken place at the top level in the government.

Since then, a total 29,273 bogus firms involved in suspected Input Tax Credit (ITC) evasion of Rs 44,015 crore have been detected, the Ministry said. “This has saved Rs 4,646 crore of which Rs 3,802 crore is by blocking ITC and Rs 844 crore is by way of recovery. So far, 121 arrests have been made in the cases,” it said.

With no major GST rate tweaks expected before the general elections, which are likely to happen in the next few months, in a bid to bolster revenue collections, tax authorities have identified registration-linked frauds as one of the key focus areas for tighter scrutiny in the financial year 2023-24. The government has taken various measures for the GST registration process. Pilot projects of biometric-based Aadhaar authentication at the time of registration have also been launched in the states of Gujarat, Puducherry and Andhra Pradesh.

The government has also taken measures to curtail evasion such as sequential filing of GST returns, system generated intimation for reconciliation of the gap in tax liability in GSTR-1 & GSTR- 3B returns and of the gap between ITC available as per GSTR-2B and ITC availed in GSTR-3B returns, use of data analytics and risk parameters for detection of fake ITC among others.