The Directorate General of GST Intelligence (DGGI), the intelligence wing under the Ministry of Finance’s Department of Revenue, has found that the majority of the alleged tax evasion was in sectors such as online gaming and casinos (Rs 83,588 crore), co-insurance/re-insurance (Rs 16,305 crore) and secondment (Rs 1,064 crore).

The FY24 year-end data, it is learnt, shows 6,074 cases of duty evasion involving a sum of around Rs 2,01,931 crore — a 99% jump from the previous financial year’s amount. In FY23, around 4,872 cases of GST evasion were detected involving duty of Rs 1,01,354 crore, with voluntary payment of Rs 20,713 crore and 92 arrests, sources said.

The sharp rise in detection of the alleged evasion in FY24 was also followed by an increase in voluntary payments, which stood at Rs 26,598 crore, around 1.3 per cent of the total GST collections in FY24.

Wrongful availment of input tax credit (ITC) or fake ITC claims has emerged as a major cause of concern for GST authorities amid continuing action against frauds, evasion and registration of bogus entities under the indirect tax regime.

During FY24, a special drive was conducted against fake ITC by the DGGI to plug the leakage in government revenue. “2,197 cases involving ITC fraud of Rs 21,089 crore were detected, with a voluntary payment of Rs 2,577 crore,” an official said. In comparison, 1,940 cases of fake ITC were detected in the financial year 2022-23 totaling an amount of Rs 13,175 crore. Voluntary payment of Rs 1,597 crore was made during FY23 and 68 masterminds were arrested.

The focus of GST authorities during FY24 was to bust fake input tax credit syndicates/rackets by catching the masterminds engaged in these frauds which has resulted in loss of revenue to the government. The GST authorities arrested 113 masterminds involved in fake ITC during the year ended March 31. There were 147 overall arrests.

DGGI has also initiated investigations against offshore online gaming entities. Such entities which are not complying with GST laws are being identified and scrutinised for necessary action as per law, sources said.

Over the last year, a spate of GST notices were issued by authorities — beginning from industry-specific investigations in sectors such as banking and insurance that later extended to online gaming and casinos. Subsequently, GST notices expanded to cover “underpayment” of tax, “incorrect availment of input tax credit” and “reconciliations differences” between returns filed and financials. This picked up pace before the end of limitation period on September 30 for sending show cause notices for FY18, which was the first year of the GST regime, which was followed by another round of demand notices before the December 31 deadline last year. Notices have also been sent for subsequent years from financial year 2018-19 to 2021-22.

MNCs in India had also received a number of GST notices over “secondment” of overseas employees. Secondment refers to the deputation of employees or expats to another part of the organisation within or outside the country. There were questions about the taxability of such employees — whether they would be treated as part of the Indian subsidiary or the overseas group company. In May 2022, the Supreme Court had held that secondment/deputation of employees from the overseas company to an Indian entity is in the nature of “manpower recruitment and supply services” and hence, would be liable to service tax. The authorities had extended this under the GST as well.

GST authorities state that their investigations are non-intrusive and they are trying to make use of Big Data Analytics and Artificial Intelligence to detect evasion under the indirect tax regime. The DGGI has upgraded its infrastructure for cyber forensics and has set up five digital forensic laboratories at Gandhinagar, New Delhi, Kolkata, Mumbai and Chennai.

In a recent set of guidelines issued to central GST officers, the Central Board of Indirect Taxes and Customs (CBIC) had detailed a standard operating procedure for them to seek approval of the zonal principal chief commissioners to initiate an investigation against any big industrial houses or major MNCs, on any sensitive matter or matter of national implications, on matters already before the GST Council, and and in matters of interpretation seeking to levy duty on goods/services for the first time. For cases where a taxpayer is simultaneously being investigated by the state GST and DGGI officers on different subject matters, the guidelines stated that the principal commissioner will “consider the feasibility” of only one of the offices pursuing all the cases with respect to the taxpayer. The guidelines have also set a deadline for tax officers to conclude an investigation within one year of their initiation.