Government to prepare a list of ‘risky’ companies created to evade GST

The authorities will use synthetic intelligence (AI) and Aadhaar registration to segregate doubtful corporations purposely created for Goods and Services Tax (GST) evasion and put them beneath the “risky” class to intently monitor their actions, two finance ministry officers stated.

The customs division has already created a database of “risky” exporters who fraudulently availed enter tax credit score (ITC) and nabbed a number of corporations, together with star exporters. Now the identical mechanism could possibly be used for pretend corporations claiming GST refunds with out truly conducting enterprise, they stated requesting anonymity.

“It is surprising that many fake firms and shell companies have been created that generate fake invoices to claim GST refunds. It has become an independent business, which needs to be dealt with an iron hand. Recently we caught the owner of one such fake firm in Pune that made over Rs 50 crore illegally,” one of many officers stated.

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The proprietor of the agency, which traded in pretend invoices on fee foundation by some pretend corporations, was arrested by the Pune zone unit of the Directorate General of GST Intelligence (DGGI). The official stated the individual was arrested on October 21, 2020 from a distant village in Osmanabad district of Maharashtra. He was produced earlier than the Justice of the Peace who rejected his bail software and remanded him to judicial custody until November 2.

Data analytics helped to catch unscrupulous actions of the individual, he stated. “Now the government is considering the use of Aadhaar in GST registration to check this menace of bogus/fake firms and thereby put a curb on fraudulent availment and passing on of ITC,” he stated.

“Also, serious deliberations are on in the Department of Revenue [DoR] of putting such dubious firms under the ‘risky’ category and to block their refunds, besides other appropriate legal actions, as necessary,” he added. DoR is an arm of the finance ministry that’s liable for the administration of issues associated to direct and oblique taxes.

Commenting on the Pune arrest, the second official stated, “There is a lobby of businessmen, which gains from such fraudulent activities, and they oppose the arrest of the person despite a recorded confession. If left unchecked, such dubious companies would mushroom all over the country.”

“We have also identified 115 fake firms across nine GST commissionerates with the help of data analytics. The crime was committed by a prospective chartered accountant based in Ahmedabad, who registered fake firms and wrongfully usurped ITC worth Rs 50.24 crore,” he stated.

“DGGI is keeping non-intrusive but a close watch through rigorous data-mining and data analytics on such dubious and unscrupulous elements who in the garb of professionals take up illegal availment of ITC and evasion of GST,” he stated. The officers stated the aspiring chartered accountant, a third-year scholar, was concerned within the registration of 115 non-existent corporations.