Ease of doing business for MSMEs: Traders and retailers have welcomed the move by the Central Board of Indirect Taxes and Customs (CBIC) to identify fake GST registrations and take appropriate action against offenders. Fake registrations are used to claim the input tax credit (ITC) through invoices without any underlying supply of goods or services.

The ‘Special All-India Drive’ to detect fake GST identification numbers (GSTINs) is underway since May 15 and will continue till July 15. “This menace of fake registrations and issuance of bogus invoices for passing fake ITC has become a serious problem, wherein fraudulent people engage in dubious and complex transactions, causing revenue loss to the government,” the CBIC had said earlier this month. 

Praveen Khandelwal, Secretary General at Confederation of All India Traders (CAIT), which represents around 8 crore traders across over 40,000 trade associations in the country, said it is a welcoming move by tax authorities to weed out fraudsters from the ecosystem.

“Because of few such people, the larger business community has suffered in the past. They create trouble for traders and retailers who abide by the GST law and pose a challenge to competition in the market. Since today business details are linked with the GST system with the help of technology, it wouldn’t be difficult for tax officials to nab culprits. However, in doing so, the government must ensure that genuine businesses are not harassed,” Khandelwal told FE Aspire.

Sanjeev Mehra, President at Delhi’s Khan Market Traders Association told FE Aspire that the move should be prospective and not retrospective. “In nabbing such offenders, the authorities should not ask buyers who purchased goods from such businesses to shell out more GST amount.”

“Otherwise, it is a good move not only because such businesses hurt other businesses but their fraudulent activities also force the government to enforce stricter compliance which makes doing business difficult for genuine businesses. If such unscrupulous sellers are out of the system, the business environment will improve,” Mehra added.

GST evasion worth over Rs 1.01 lakh crore in the country during the financial year 2022-23, almost doubled from FY22, was detected by tax officers while a recovery of Rs 21,000 crore was made in FY23 by the officers of the Directorate General of GST Intelligence (DGGI), PTI reported in April. 

The total cases of GST evasion had increased to around 14,000 in FY23 from 12,574 cases in FY22 and 12,596 cases in FY21. 

Rajeev Batra who is a proprietor of Kiddies Centre making kids tricycle, strollers, walkers etc., and President of Rajdhani Cycle Dealers Association in Delhi’s Chandni Chowk market said traders and retailers feared harassment before the beginning of the drive. “However, no such case of harassment by officials or cancellation of license has surfaced so far,” Batra told FE Aspire.

In the event of identification of fake registration, there should be a show cause notice and by due process of law, the time should be given to the business to respond, said Khandelwal.