GST Fake Firm Registration highest in Haryana

The Ministry of State in the Ministry of Finance Shri Pankaj Chaudhary has answered to question asked in Lok Sabha that GST Fake Firm Registration is highest in Haryana.

The Minister asked the following questions in Lok Sabha:

Will the Minister of FINANCE be pleased to state:

(a) whether the Goods and Services Tax (GST) authorities have detected 4,153 bogus firms involved in suspected evasion of input tax credit (ITC) worth around Rs. 12,036 crores during October-December 2023 and if so, the details thereof;

(b) whether Maharashtra is in the top spot among 36 States and Union Territories (UTs) with the highest number of 926 bogus firms with suspected tax evasion of Rs. 2,201 crores and if so, the details thereof;

(c) whether this detection has helped in the protection of revenue of Rs. 1,317 crores out of which Rs. 319 crores has been realised and Rs. 997 crores has been protected by blocking input tax credit and if so, the details thereof;

(d) whether 41 persons have been arrested in these cases so far and if so, the details thereof; and

(e) the steps taken/being taken by the Government to prevent such financial crimes in the country?

The Ministry of State in the Ministry of Finance Shri Pankaj Chaudhary replied:

(a) and (b): Yes Sir. According to the Ministry of Finance’s press release dated January 7, 2024 (Annexure 1), during October and December of 2023, GST formations nationwide conducted a sustained drive against non-existent taxpayers and discovered 4,153 fake firms suspected of evading Input Tax Credit (ITC) totalling Rs. 12,036 crore. The detected amount of fake ITC is Rs. 12,036 Crore (Rs. 3,619 Crore (State) + Rs. 8,417 Crore (Centre). 926 fraudulent companies in the state of Maharashtra were found to be involved in alleged ITC (Input Tax Credit) avoidance of Rs. 2,201 crore (282 by Central GST Authorities and 644 by State GST Authorities).

(c) and (d): Yes Sir. Revenue of Rs. 1,317 crore has been protected thanks to this detection; of that, Rs. 319 crore has been realised and Rs.997 crore had been protected by blocking ITC. These cases resulted in the arrest of 41 people.

(e) Aadhar authentication and physical premises verification are two strong checks that are part of the GST registration process. The said checks have enabled in early detection of fraudulent registrations and have also curbed fraudulent registrations to a great extent. Further pilot projects using biometric-based Aadhar authentication at registration have been initiated in Gujarat, Puducherry, and Andhra Pradesh to reinforce the registration process.

Furthermore, to combat tax evasion, the government has implemented measures such as sequential filing of GST returns, system-generated notifications for reconciling the gap in tax liability in GSTR-1 and GSTR-3B returns, as well as the gap between ITC available under GSTR-2B and ITC availed in GSTR-3B returns, and the use of data analytics and risk parameters to detect fake ITC.

To curb fraud in Goods and Services Tax (GST) and increase compliance, the GST formations, under the Central Board of Indirect Taxes and Customs (CBIC) and the State/ UT Governments, across the country regularly take action to detect and take action against non-existent/ bogus registrations and issuance of fake invoices without any underlying supply of goods and service.