Govt takes stringent action against fraudulent firms, identifies 29,273 bogus entities in GST scam crackdown

GST officers detect over 29,000 bogus firms involved in fake ITC claims of Rs 44,000 crore

The government announced on January 7 that GST officers have identified 29,273 bogus firms engaged in fraudulent Input Tax Credit (ITC) claims amounting to Rs 44,015 crore in the eight months leading up to December 2023. This discovery was made during a concerted effort to combat fake registration. The actions taken against these fraudulent entities have resulted in saving revenue amounting to Rs 4,646 crore. More significantly, the action underscores the Centre's commitment to curbing tax evasion and maintaining the integrity of the Goods and Services Tax (GST) system.

During the October-December quarter, authorities identified 4,153 suspected bogus firms allegedly involved in ITC evasion, totaling around Rs 12,036 crore. The Central GST Authorities played a role in detecting 2,358 of these identified bogus firms.

In the efforts to detect and address bogus firms involved in suspected ITC evasion, Maharashtra topped the list with 926 such firms identified. Following Maharashtra, other states with significant numbers of detected bogus firms include Rajasthan with 507, Delhi with 483, and Haryana with 424.

During the December quarter, the detection of bogus firms involved in suspected ITC evasion protected revenue amounting to Rs 1,317 crore. Out of this, Rs 319 crore has already been realised, and Rs 997 crore has been protected by blocking ITC. The finance ministry reported that 41 individuals were arrested in connection with these cases, with 31 of these arrests made by the Central GST Authorities.

"Since the initiation of the special drive against fake registrations in mid-May 2023, a total of 29,273 bogus firms involved in suspected Input Tax Credit (ITC) evasion of Rs 44,015 crore have been detected. This has saved Rs 4,646 crore of which Rs 3,802 crore is by blocking of ITC and Rs 844 crore is by way of recovery. So far, 121 arrests have been made in the cases," it said in a statement.
In Maharashtra, during the December quarter, the suspected tax evasion by 926 bogus firms amounted to Rs 2,201 crore. Authorities made 11 arrests in connection with these cases. Similarly, in Delhi, the suspected tax evasion by 483 bogus firms was Rs 3,028 crore, and 11 individuals were arrested. These figures highlight the magnitude of suspected fraudulent activities and the financial implications involved, underscoring the importance of robust enforcement measures to curb tax evasion within the GST system.

In Andhra Pradesh, the suspected tax evasion by 19 bogus firms amounted to Rs 765 crore. In Haryana, 424 bogus firms were detected, and the suspected tax evasion was Rs 624 crore.

For Uttar Pradesh, 443 bogus firms were identified, and they were involved in suspected GST evasion of Rs 1,645 crore. During the quarter, five individuals were arrested in the state in connection with these cases.

In a concerted effort to combat fraud in Goods and Services Tax (GST) and strengthen compliance, GST formations under the Central Board of Indirect Taxes and Customs (CBIC) and various State/UT governments across the country are conducting a targeted drive.

The Centre has implemented various measures to strengthen the GST registration process. As part of these efforts, pilot projects involving biometric-based Aadhar authentication at the time of registration have been launched in the states of Gujarat, Puducherry, and Andhra Pradesh. The use of biometric authentication aims to enhance the registration process, increase security, and mitigate the risks associated with fraudulent registrations within the GST system.

(With inputs from PTI)