TaxTMI 
TaxTMI 
Regarding Guidelines and standard operating procedure to be adhered by the proper officer/inspecting officer in relation to the non-genuine taxable person cases.
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....ITC credit in discharging tax liability and claiming of erroneous refund. The unscrupulous entities engaged in such activity also defraud other authorities such as Banks, IT department by inflating turnovers, money laundering etc. Such wrongful availment of ITC is claimed on the inward supplies shown from non-genuine taxable person. 1.2 Non-genuine taxable person is the one who issues invoice under GST Act without actual supply of goods or services to pass on inadmissible ITC to the recipient beneficiary. Non-genuine taxable person shall also include the persons who obtain registration by means of fraud, misstatement or suppression of facts and for the fraudulent purposes like claim of bogus refunds or making available invoices and e-way bills for helping other taxable persons in transportation of Goods where such supplies are not declared in their books of account. But such Non-genuine taxable person are not engaged in genuine business activity of supply of goods or services. 2. Features of non-genuine taxable person and their beneficiaries :- 2.1 Master mind / Key person/ Kingpin is the person who operates the whole network of fake billing activity by creating web of fak....
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....f section 16 of the RGST Act, 2017, which stipulates the conditions to avail credit that the buyer should be in possession of invoice on which tax has been paid to the Government and he should have received the goods. In such cases, availment of credit without receipt of goods is inadmissible and utilization of such credit for actual regular supplies results in loss of revenue. IV. Generating fake invoices for making available invoices and e-way bills for helping other taxable persons in transportation of Goods where such supplies are not declared in their books of account. 3. Necessity/Purpose of Standard Operating Procedure (SOP) :- In view of these circumstances, it is necessary to have standard operating procedure for- 3.1 Investigation / inspection / verification for identification of non-genuine tax payers. 3.2 Use of information and 'evidences' of non-genuine taxable person in the process of adjudication/ audit/ assessment or other legal actions in cases of recipients of ITC claimed on the basis of fake invoices. 3.3 Creation of a 'Repository' of non-genuine taxable person which will contain list of non-genuine taxable person along wit....
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....espect of non-genuine taxable person cases, where inspections have been conducted by GST authorities, if it is found that, the taxable persons are non- existent/non-functional at the business premises or at the residential address given, the proper officer has to establish beyond doubt that, the taxable persons are actually involved in bill trading and no genuine business activity has been carried on by them. Such findings have to be recorded by the proper officers along with documentary evidences. 5.2 The following evidences have to be gathered by the proper officer to arrive at a conclusion that the person is actually a bill trader and functioning as non- genuine taxable person :- i) If the taxpayer is found to be person of no means, the officer shall obtain name. address and the contact details of operator. Local inquiries, like, how many years since the taxpayer/ person is staying, whether office is operated regularly, etc., shall be conducted wherever necessary. ii) If the person is not available on the address as per records, local enquiry shall be conducted that includes gathering more evidence like recording statement of current occupant, neighbour as w....
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....s to be obtained. If books of accounts or details of transactions wherein only invoices are being issued, are found in the premises of professionals (Goods and Service Tax Practitioner/CA/ Advocate), this fact should be taken on record while taking statement. (xii) E-services profile details including e-mail IDs and mobile numbers used for the purpose of getting electronic verification code (EVC) shall be taken on record. Name and address of the person who uses the password / OTP for e-services (viz. filing of returns, refund application and other related e-services etc.) shall be taken on record. This person may be CA or GSTP or operator .. (xiii) As far as possible, efforts should be made to obtain electronic data stored on Pen-drive/ hard disk / CD / Laptop or PC etc. The data shall be obtained without losing evidential value. (xiv) The details of the digital signature certificate (DSC) /e-sign used for uploading the documents and making compliances may be obtained from the concerned authorities or service providers so as to identity the person responsible for uploading compliances. (xv) Due care needs to be taken at the time of recording stat....
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....nuine taxable person including cancellation of registration, prosecution, blocking of the ITC, and reversal of the ITC and levying of penalty and interest to curb further bill trading activities. This can be made by the following actions- 6.1 Where during investigation it has been conclusively established that invoices have been issued without underlying any supply of goods or services, then invariably the registration of such taxable person shall be cancelled from the effective date of registration i.e. ab-initio. 6.2 The proper officer must verify the authenticity of the documents presented at the time of registration and those obtained during the investigation. If the documents are genuine, then the actual person can be traced for investigation, and if the documents are false and forged, then it is evident that the registration is invalid and bogus, the proper officer shall issue the speaking and reasoned show cause notice for suo-moto cancellation of GST registration ab-initio according to the provisions of Section 29 of the SGST/CGST Act(s). After passing order for cancellation of registration copy of the cancellation order should be uploaded to the department's webs....