Crackdown on tax violations: 10,000 fraud GST registrations turn up in first week of drive

Central and state goods and services tax officials have detected about 10,000 fake GST registrations in the first week of a joint drive. The officials are conducting door-to-door physical verification of addresses before initiating any action, people aware of details said. The campaign against fraudulent invoices and registration began May 15 and will run until July 15.

"In the first week of the drive so far we have detected about 10,000 fake GST registrations," a senior official told ET.

In many cases, officials found forged electricity bills, property tax receipts and rent agreements were used as proof of principal place of business to obtain GST registration.


The amount of fake input tax credit is yet to be ascertained. "It is premature to assess numbers so far but initial estimates suggest it to be above ₹25,000 crore," the official said, adding that the final numbers will be available once the drive ends.

The physical verification cases have been selected through data analytics and risk parameters by GST Network (GSTN), which identifies possible fraudulent GSTINs for state and central tax authorities.

Concerns
However, small-scale industry lobby groups say this may pose a problem for smaller companies that are using co-working spaces.

"The officers verifying GST are insisting on physical records, along with the presence of employees and/or directors," said Vinod Kumar, trustee and president, Forum for Internet Retailers, Sellers, and Traders (FIRST), India.

"As most of the online sellers register their places of business as their chartered accountant's premises or in a co-working place, affording them cost benefits and better compliance, the current drive could cause immense damage to the genuine small sellers," he said.

The official cited earlier dismissed the concerns, saying these are not search operations. "It is only the verification of the physical address by the field formations. Cancellation action will be carried out only after due diligence," the official said.