DGGI finds 8,000 fraud ITC claim cases

The Director General of GST Intelligence (DGGI) has identified around 8,000 examples of bogus input tax credit claim and is in the process of notifying those implicated.

A senior government official stated, “Data analytics have assisted us in detecting a large number of cases of mismatch between form GSTR 3B and GSTR 2A, and we have sent notices to approximately 5,000 businesses.”

A considerable number of these organisations were discovered to have suppliers with GST registrations based on forged papers or to be engaged in the provision of fake invoices. In certain situations, the input tax credit was claimed on the basis of suppliers whose GST registration had previously been terminated or who were discovered to be shell corporations.

Approximately 1,500 enterprises have received tax demand notifications totaling more than 100 crore, including penalties and interest. For the disparities relevant to the financial years 2020-21 and 2021-22, the warnings were sent after May 15.

Officials stated that mismatches often occur when the supplier does not file the return or uploads an invoice beyond the due date of filing, or when they file a delayed return for whatever reason. In such circumstances, the legislation limits the claim of input tax credit to the amount of credit shown on the GSTR-2A. They may only claim pending credit if the supplier submits a late return after paying interest. When disparities are clarified with proof and good explanations, officials are sympathetic.

However, officials stated in the aforementioned notifications that the suppliers never submitted any legal returns and were related to organisations with a record of generating fake invoices without supply of services or goods.

GSTR-3B is essentially a summary return of outward supplies and claimed input tax credits, as well as taxes paid. GSTR 2A is an automated return prepared for a taxpayer from the GSTR-1 of his seller.

The GST authorities conducted a two-month operation, which ended on July 16, on firms and syndicates involved in the provision of fraudulent bills and invoices to get credit. Authorities have now begun the second part of the investigation, in which they will go after firms that received bogus invoices from fraudulent supply companies.