Measures taken by Government/GSTN/CBIC to Prevent GST Frauds

On 3^rd August, 2021, Ministry of Finance released two press releases relate top GST Frauds & recoveries. In these press releases, Union Minister of State for Finance Shri Pankaj Chaudhary explained data with figures related to fraud, detection & recovery.

In the same Press Release, Union Minister of State for Finance Shri Pankaj Chaudhary explained Certain Measures are taken by Government and various validations have been built in GSTN/CBIC system to weed out tax- evaders, to prevent GST Frauds, are as follows:-

• Introduction of AADHAR authentication for processing of new registration application. Applicants not opting for Aadhaar authentication or failing authentication are subjected to physical verification of the Principal Place of Business before grant of registration;
• Facility to verify cancelled / existing registrations of the applicants seeking new registrations;
• Provisions to suspend / cancel registration of taxpayers found to the adverse notice of the department;
• Bulk suspension of registration by GSTN based on business intelligence and further follow up of the same by the CBIC;
• Bulk cancellation of registration of taxpayers who failed to file GSTR3B returns for six or more consecutive months;
• Additional grounds for cancellation of registration have been introduced where there is mismatch between FORM GSTR1 and FORM GSTR 3B (Rule 21) of CGST Act, 2017, etc.;
• Facility to verify ITC through generation of GSTR2A.
• To prevent fake dealers and shell companies to pass on fake credit, without filing their GSTR3B returns and paying taxes, a provision has been made to block furnishing of outward supply statement in FORM GSTR-1 by a taxpayer, if 2 or more GSTR 3B returns are not filed by the said taxpayer.
• E-invoices have been made mandatory for all B2B transaction with turnover above Rs. 50 crore.
• Generation of E-way bill by those taxpayers who have not furnished return for consecutive period of two month has been restricted.
• Blocking of ITC Credit under Rule 86A of CGST Act, 2017, was introduced if the proper officer has reason to believe that ITC has been availed fraudulently.

DISCLAIMER: This publication is merely a general guide meant for knowledge purposes only. All the references or content are for educational purposes only and do not constitute legal advice. We do not accept any liabilities whatsoever for any losses caused directly or indirectly by the use/reliance of any information or conclusion contained in this publication. Prior to acting upon this publication, you’re suggested to seek the advice. This work is entirely in the interest of profession and to contribute into my beloved subject of GST.

The author can be reached at [email protected]