MM TAX CLUB

Tax evasions, bogus invoices without any deliveries of goods, cyber frauds using Goods and Services Tax (GST) identification numbers, forging up shell companies, fake business transactions, failure to deposit due taxes to authorities and illegally claiming input tax credit (ITC) have now become the biggest reasons for rise in GST-related offences in the country.

The claim is apparent in the figures provided by the Finance Ministry to the Lok Sabha, where the number of such offences that stood at 12,574 in 2021-22 shot up to 13,492 in 2022-23 (till February).

This jump of around 7.3 percent comes after a slowdown in rise of such offences was seen in FY2 to FY22 which was 0.2 percent. The data provided by the ministry to the Parliament on Monday highlights that in the course of five years from 2017 to February 2023, the total registered GST-related offences are 57,111. For FY18, the number of cases were at their lowest at 424, for FY19, it rose to 7,368, in FY20 the numbers were 10,657, in FY21 it again increased to 12,574, followed with a descending trend last fiscal at 12,574. From 2022 to February 23, the number ascended at an all-time high to 13,492.

In terms of percentage, the rise of cases in FY19 was 44.6 percent, FY21 it was 18.2 percent, 0.2 percent in FY22 and 7.3 percent in FY23.

Among all states, Maharashtra topped the list with a total of Rs 60,000 crore of misappropriation being detected, followed by Rs 40,507 crore in Karnataka, Rs 26,156 crore in Gujarat, Rs 24,217 crore in Delhi, Rs 22,712 crore in Haryana and Rs 17,604 crore in West Bengal. A total of 1,316 offenders have been arrested in these five years, the data stated, adding that the maximum number of accused persons are from Maharashtra.

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According to the Finance Ministry, the total amount of money misappropriated and showed in records in these five years is close to Rs 3.11 lakh crore and the recovery made is around Rs 1.03 lakh crore.

To get a hold over the malpractices and stop embezzlement, the government has said it has put into place various measures which includes, using robust data analytics and artificial intelligence to identify and track risky taxpayers and detect tax evasion, carrying out a nationwide special drive against unscrupulous entities for availing and passing on input tax credit (ITC) fraudulently on the strength of fake/bogus invoices.

Further, availing ITC has been restricted to invoices and debit notes furnished by the supplier in their statement of outward supplies, sharing of data with partner law enforcement agencies for more targeted interventions, mandatory Aadhaar-based authentication for new GST registrations as well as centralised suspension of registrations of registered persons who default in timely-filing of returns, among other regulations

Regarding tax evasion by insurance companies, the revenue department informed the Lok Sabha that cases of evasion of indirect taxes (GST and service tax) have been booked by the Central Board of Indirect Taxes and Customs (CBIC) field formations against various insurance companies. In the last five years, 106 cases have been registered across the country and Rs 7,581.80 was misappropriated out of which Rs 1,347.17 have been recovered.

Ever since the GST rollout in 2017, matters of tax evasion and other related offences have been picking up pace at a significant pace and with time, various modus operandi have come to fore to evade the indirect tax using ingenious methods.

Source