The center and states are seeking to further tighten the GST registration process and legal measures to deal with the growing instances of false invoices.
Finance Ministry sources said that a meeting of the GST Board legal committee had been called on Wednesday to discuss these issues.
The committee, made up of top central and state tax officials, will also discuss fraud in GST fake invoices, further tighten the GST registration process, and take other legal measures, including the necessary legal amendment required in the GST to reduce the threat, they added. Moreover, provisions regarding presumptive registration under the Goods and Services Tax (GST) Act may be more stringent to prevent misuse of such provisions by fictitious merchants, and provisions regarding a registration suspension may also be simplified. To make suspension and deregistration procedures more efficient and faster, so that timely fraudulent operator can be prevented from continuing to transfer fraudulent credit along the chain.
“It is also known that data analysis techniques will be used to identify taxpayers, who are suspected of engaging in fraudulent activities and likely to take concerted action against these elements by suspending their registration, followed by detailed physical and financial verification by field officers to validate their operations, before permitting them to reuse their record. “
The General Directorate of Intelligence in the Goods and Services Tax (DGGI), the investigation unit of the GST, has arrested 30 unscrupulous people dealing with fraudulent invoices and has identified 1,282 entities and recorded 393 cases so far.
The goods and services involved were scrap and scrap metal (ferrous and non-ferrous metals), iron and steel products, copper wires, plastic pellets, dairy products (butter and margarine), electronics, leather, textiles, and chemicals, Software, waste paper, cement, TMT tape, tobacco products, construction services, labour contract services, labour supply services, advertising and animation services, other employment services and labour supply, etc.
The Legal Committee will also consider the impact of issuing fraudulent invoices and the strict procedures/measures required by the GST to limit these activities and will deliberate on measures required to fill gaps in the law that are being exploited by the items.
Sources said that companies whose owners or promoters do not have a fixed financial record, such as filing income tax returns and paying income tax to the government, may require detailed physical and financial verification by tax officials before their company can be considered for GST registration.
"The Ministry of Finance is working to fill these gaps in the GST registration process to ensure that only original companies obtain GST registration and that companies intending to defraud the system are disposed of at the same stage of registration.", one of the sources said.
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