Following several arrests involving fraudulent transactions with regard to the Goods and Services Tax (GST) in Gujarat, Suresh Nandanwar (Indian Revenue Service), Commissioner of Central GST and Central Excise, Ahmedabad South, said on Tuesday that fake invoices and the non-filing of returns are two “major challenges” being faced by the department.
“An issue that we are facing on a daily basis is that of fake invoices. People doing it are doing so knowingly, it is a chain and the people involved do not know what danger they are in,” said Nandanwar, while addressing a conference on “GST 2.0: Unresolved Issues and Challenges”, organised by The Associated Chambers of Commerce and Industry of India (ASSOCHAM).
“In fact, this is a punishable offence. We have been arresting people and it is very difficult to get bail,” he said, urging representatives from the industry to not indulge in such activities. In January, the Gujarat zone of the CGST arrested a man who had issued fake invoices worth Rs 175 crore to pass on fraudulent input tax credits amounting to Rs 32 crore.
“The system is so robust and good that we can get data at our fingertips. Once this data is available, it is very easy to trace people. With Aadhaar cards and other systems in place, it is very difficult for anyone to hide from the law,” Nandanwar added, without revealing the total number of arrests that have been made so far.
The official noted that the quantum of GST non-filers was also a major concern for the department. “Non-filers means, the party is not filing the return and not paying the duty- we used to face this in the service tax regime, and now we are facing the same in GST. To recover the amount in such cases, the provisions are very stringent. We can go and attach the bank account, and in such situations, it becomes very difficult for the industry.” he remarked.
Experts like Mitesh Jain, Associate Director at Pricewaterhouse Coopers Pvt Ltd, said that the Modi government plans to introduce e-invoicing by September 2019 in an attempt to solve the issue of fake invoices. “E-invoicing has already been implemented in South Korea, Brazil, and countries where there have been challenges of people evading taxes. This is an important step to ensure that genuine tax-payers are at ease of compliance, and those who aren’t can be caught easily. The government wants to curb undue credit being taken,” he said. It is bringing in a “simplified return” system (GST RET-1) to ensure that the compliance improves manifold, he added.
Niraj Hutheesing, founder and director of Cygnet Infotech Pvt LTd, said that his organisation has identified fifty types of frauds, based on data provided by the Goods and Services Tax Network (GSTN). Considering the mandate of the 2019 elections, he said that the new government will “move at a fast pace to implement” important changes in the GST.