TaxTMI 
TaxTMI 
Fake registration and action of tax officials on such entities - matter regarding
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....hout actual supply of goods or services to pass on inadmissible tax credit of ITC to the claimant. Non-genuine taxpayer shall also include the persons who obtain registration by means of fraud, willful misstatement or suppression of facts and for the fraudulent purpose like claim of bogus refunds or generation of e-way bills for suppressed supplies of other taxpayer, but they themselves are not engaged in genuine business activity. Several cases of monetization of credit fraudulently obtained or ineligible credit through refund have been detected in the past. On Verification, several taxpayers were found to be non-existent in a number of cases. In all these cases it has been found that the Input Ta x credit (ITC) was taken by the taxpayer on the basis of fake invoices and the tax liability was paid using such ITC. The invoices that are usually treated as Take' wherein the GST invoices are raised by an entity without actual supply of goods or services. Below are some instances (only illustrative list and not exhaustive) in which such fake invoices could be misused in the GST regime.- (a) Issue of invoice without supply of goods or services where payment of tax is made b....
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....istrative functionaries of the Government. Reference may be made to this office Instruction no. 01/2020-GST dated 14-12-2020, 09/2023-GST dated 9-5-2023, 17/2024-GST dated 13-8-2024 and Circular no. 02/2023 dated 18-7-2023 with other instructions and guidelines provided from time to time by the Office of the undersigned to curb the menace of fake registrations. In view of these circumstances, each and every tax official should be cautious with the fake or bogus entity within the jurisdiction registered to dupe government revenue by engaging in passing of fake ITC to beneficiaries. The following are few duties and responsibilities of tax officials to deal with the fake registrations which are off course indicative in nature and not exhaustive. Mandatory Field Visit of the Registrations provided by the Apex Office based on suspicion: Proper officer should mandatorily assign field verification to those registrations which are suspected to have engaged in either issuing or receiving of Input Ta x Credit as per data shared by the Apex Office or received from any other sources. The field officer should invariably visit the place of business and enquire in details the natur....
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....involved in non-genuine activity shall be obtained, if the taxpayer is available. Due care needs to be taken at the time of recording deposition to frame the question properly in statement, so that all relevant information having evidential value is covered. (k) As far as possible, affidavit with photo ID should be taken with the following detailed contents, wherever applicable: • supply or goods/services and filed returns in Form GSTR-3B by reporting such fake outward supplies and used wrong ITC to discharge liability of such outward tax. • the taxpayer is engaged in issuance of fake Ta x invokes without actual supply of goods/services and also received such fake tax invoices without receipt of any goods and filed returns in Form GSTR-3 by reporting such fake outward supplies and used wrong ITC upon the strength of such fake tax invoices received and other related documents. • the person in whose name the GST registration has been obtained in his name and he was not involved in it. Thus, he had not done any actual business of supply of goods or services. • the taxpayer registration has been obtained by somebody els....
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....tion of the beneficiaries of the fake taxpayer is very much important to recover/reverse the Input Ta x Credit which eventually protects the Government Revenue. The Zonal Joint Commissioner of State Ta x shall help detect the end beneficiaries in the chain of movement of ITC from fake registrations with the help of analytics tool like BIFA, etc. If beneficiaries are located outside his/her jurisdiction within or outside the state, a detail report along with certified copy of evidences should be forwarded to the Nodal Officer at Apex Office who will take up the matter with the concerned jurisdictional officer or respective counterparts in other states. Bill trading and other malpractices to dupe government revenue: While analyzing the data shared by the Apex Office, during field verification the taxpayer may be found functional at the principal place of business. The field officer without a second thought would upload positive report and the proper officer would also withdraw the suspension order thus reinstating the taxpayer. The tax officials are requested to be vigilant and take action with proper application of mind and common sense, which is again case to case basis....