It has come to the attention of the GST authorities that several taxpayers, whose GST registrations were previously canceled due to fraudulent practices, continue to operate their businesses and collect taxes unabated. 

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According to highly placed sources, the central government, in collaboration with the state governments, will take stringent action against such taxpayers to address this issue. As part of the forthcoming national tax conference scheduled for next month, the state and central GST officers are set to unveil a Standard Operating Procedure (SoP) aimed at effectively tackling such cases of tax evasion and ensuring compliance.

The SOP is expected to cover a wide range of topics, including:

  • How to identify cases of unauthorized GST collection
  • How to investigate and prosecute such cases
  • How to create awareness among businesses and consumers about unauthorized GST collection

“Even after the government cancelled several GST registrations, many of these fraudulent businesses are continuing their businesses and collecting GST from people. In the national tax conference to be held in November, we will announce the SoP to deal with such entities,” a top official told TNIE. Once the GST registration has been revoked, it is illegal to continue with the business and collect taxes from consumers, he added. 

The Government conducted a nationwide drive from May 16 to July 15 to uncover fake registrations. According to the finance ministry’s update to the Lok Sabha, Central GST officers had arrested 7 individuals during the drive.  As part of this initiative, officers from the Central Board of Indirect Taxes and Customs (CBIC) had identified 9,369 fraudulent entities, detecting a GST evasion of `10,902 crore as of July 9.

Additionally, between 1 July 2017 and 30 June 2023, Central GST officers identified 5,070 cases of fraudulent GST registration, misusing PAN/Aadhaar details of others. During this six-year period, tax evasion amounting to Rs 27,426 crore was detected, and a recovery of Rs 922 crore was made. A total of 331 individuals have been arrested in connection with these cases, as per the government statement.

Here are some of the benefits of the proposed SOP:

  • It will help to streamline the process of identifying, investigating, and prosecuting cases of unauthorized GST collection.
  • It will help to create a more uniform approach to tackling this problem across the country.
  • It will help to raise awareness among businesses and consumers about unauthorized GST collection, so that they can be more vigilant.
  • It will help to deter people from engaging in unauthorized GST collection.

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