Amount of fraud in GST needs cautious approach: Official

The CGST department needs to take a cautious approach because of the amount of fraud happening in claiming input tax credit (ITC) by business entities, an official of the GST administration said on Friday.

Deputy commissioner, north, CGST Naveen Rana said in a CII organised webinar that there are many reasons for blocking ITC by the department.

"Blocking of ITC is done after substantial verification. The amount of fraud happening in GST is crucial for the department to take a cautious approach", Rana said.


He said that in many cases it is found that suppliers of inputs are found to be non-existent.

"Upon physical verification by the GST department, if suppliers are found to be non-existent, then ITC will be blocked. Then the option left with the department is to initiate action against those claiming ITC", he said.

Rana said the other main reason for the department to block ITC is that suppliers are often found not filing the returns on time, not paying taxes to the government.

According to the official, many parties (business entities) have gone to high court saying that they are not responsible if the suppliers are delinquent in their duties.

Rana said the affected parties should approach the development to know the exact reason for ITC getting blocked.

"If the department finds the reason furnished by the parties are found to be satisfactory, then ITC is unblocked. However, it is automatically unblocked after a period of one year", he added.

Rana said ITC is essential for running a business under the GST regime.