New measures suggested by GSTN to track fake invoice/dealer’s rackets

GSTN taken the measures to track the fake invoice/ dealers/rackets by press realize notified.

New Press Release issued by Ministry of Finance dated December 23, 2020, regarding Measures recommended by GST Council to curb fake dealers/invoice rackets notified. The recommendations of the Law Committee as made aware are central to four main messages, which include:

  1. tightening up the verification process for new registration; – Initiatives suggested by the GST Council to curb counterfeit dealers/invoice rackets made aware
  2. suspension on the basis of data analytics and mismatches: – In-Person Confirmation must be performed for GST Registration, Identification of counterfeit dealers through data analysis, and suspension
  3. Minimum cash payment to deter dummy businesses: -Mandated by law 1 percent GST payment for all those risky dealers and fly-by-night operators who have uncommon large turnover and lack financial legitimacy
  4. Ease of business and precise targeting in the interest of intelligently protected smaller firms.

The main suggestion of the Law Committee of the GST Council is to control the fresh or new registration of applicants without a commercial purpose and to remove existing counterfeit traders from the systems. Measures, therefore, notified to the systemic tightening of new registrations by identifying counterfeit dealers, changes to the registration process, the use of Aadhaar during registration and Aadhaar as the capture of details during registration would have an impact on the threat of mushrooming fake firms and ITC fraud by fly-by-night operators.

Verification of the new registration: pursuant to such initiatives as set out in the notifications, there must now be in-person verification before registration is given to the applicant. In addition, in the event that the applicant opts for Aadhaar authentication, Aadhaar Biometric Authentication will be submitted to one of the Information sharing Centers notified by the Commissioner.

In the event that the applicant has not chosen for Aadhaar authentication, the request processing, the biometric data, and the verification of KYC must be carried out at the Verification Facilities. This verification process may also involve snapping pictures and verifying the applicant’s original documents uploaded to the database.

In impact, GST is going to move towards a better verifying regime for the registration of new business owners, with many of the steps taken in an automated environment. The time line for the grant of registration to the Aadhaar Authenticated Applicant is now 7 days for the proper examination of the application. In order to overcome the cases of fake invoices, some extreme medical confirmation may be held out with the approval of an officer authorized by the Commissioner in a few risky cases where a person has successfully undergone Aadhaar authentication. The timeframe for granting registration in such cases would now be 30 days.

Cancelation and suspension: In the new regime notified suspension and cancellation would be based on the data analytics and mismatches. Registration shall also be liable for cancellation if the input tax credit is used in contravention of the law of the CGST Act or if the outward supply details in FORM GSTR-1 exceed the outward supply declared in FORM GSTR-3B for one or more tax periods. Some rather cases would result in ITC being passed or used without payment of tax and would therefore be liable for cancellation of registration. These taxpayers would remain in suspension during the cancellation hearings.

Minimum Cash Payment: In another considerable change in rules for Disposal of Dummy Businesses, the existing eligibility limit for the use of 10 per cent input tax credit (ITC) by a registered person in respect of invoices where the details have not been provided by his suppliers would be reduced to 5 per cent w.e.f. 1 January 2021, as a framework for the implementation of the QRMP scheme with the facility. It could make sure that large taxpayers carry on making purchases from small taxpayers.

To reduce false ITC use and transfer of such credit by unscrupulous persons who usually pay no tax in cash, in specific in those risky cases where GST turnover does not match tax returns where the value of taxable supply other than exempt supply and zero-rated supply exceeds Rs. 50 lakh, such registration person will not be able to use the amount of ITC available in one month. At least 1% of the liability would have to be discharged in cash. This change will come into force on 1 January 2021.

Ease of Doing Business & Precise Targeting: Even so, there are a few exceptions to the above requirement to limit the use of ITC to ensure Ease of Doing Business. Appropriately, where a taxpayer has paid more than Rs. 1 lakh as income tax each of the last two financial years, or has received a refund of unused ITC on account of a zero-rated supply or inverted duty structure of more than Rs 1 lakh in the previous fiscal year, or has released its liability for output tax by electronic cash legs for an amount exceeding 1% of the total amount. Such taxpayers may use more than 99 percent of ITC to discharge their tax liability.  Moreover, the Govt Dept, the PSU, local & other statutory bodies, are exempted from theses limit on Input Tax credit utilization.

The Ease of Doing Business for Real Taxpaying citizens, Corporate Entities and Merchants, and Effective Trying to target in the Benefit of Small And medium enterprises would therefore not have an influence, as the Law Committee recommended initiatives for the precise identification of possibly riskier taxpayers based on very well set limits in the automated environment. In the same spirit, moreover, to control the false invoice threat, now that a registered person has not filed Form GSTR-3B for the previous two months, his Form GSTR-1 will not be created. A comparable limitation has been positioned on QRMP taxpayers if the form GSTR-3B is not submitted for the prior one tax period of three months.

Jointly, such measures are able to monitor dummy registrations and fake ITC billing to move the GST procedure towards that cleaner and more robust regime.

Even more inquiries on the subject are in the process

GST Return compliances calendar- Nov 2020

SALIENT FEATURES OF NEW GST SYSTEM IN INDIA

Key points of 42nd GST council Meeting headed By FM N. Sitharaman

Disclaimer: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; before making any decisions do consult your Professional / tax advisor. For misrepresentation or interpretation of act or rules Author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. carajput.com is committed to helping entrepreneurs and small business owners to start, manage and grow their business with peace of mind. Our goal is to support the entrepreneur on legal and regulatory requirements and to be a partner throughout the entire business life cycle, offering support to the company at every stage to ensure that it is compliant and consistently growing. Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 09811322785/4 9555 5555 480)

GST EVASION: DGGI took action against 3 Firm for tax evasion of Rs 600 Crore

GST-EVASION: DGGI took action against 3 companies for tax evasion of more than Rs 600 Crore

www.carajput.com;GST Evasion

www.carajput.com; GST Evasion

Three persons arrested on charges of tax evasion of Rs 600 Crore, i.e. for the issuance of fraudulent invoices without the actual supply of Rs 4,198 crores, and illegally transferred as ITC credit to different entities under the GST Act.

There was an argument against M/s. Reema Polychem Pvt. Ltd., M/s. Fortune Graphics Limited, & M/s. Ganpati Enterprises, which were found to be engaged in the issuance of invoices without any real supply of goods.

The case was identified and established by the officers on further data analytics from the case filed against one of the exporters, M / s Anannya Exim, which was protected by the entire India Joint Operation launched by DGGI-DRI in September 2019, against various exporters for fraudulently demanding IGST refunds on the basis of ineligible ITC.

www.carajput.com;GST Evasion

www.carajput.com; GST Evasion

In the course of the investigations conducted by DGGI Hqrs, it emerged that the three companies referred to above, namely M/s. Reema Polychem Pvt. Ltd. respectively. Ganpati Enterprises released invoices worth more than Rs. 4,100 Crore, with a tax sum of more than Rs. 600 Crore being transferred fraudulently as ITC credit to various entities.

The foregoing companies/firms shall be interested in the issuing of bills without any real supply of products. This case was found and established by officers on further review of the case filed against one of the exporters, namely M / s Anannya Exim, which was protected by DGGI-DRI’s entire operation in India on 11.09.2019, against different exporters for fraudulently demanded IGST refund on the basis of invalid ITC.

In this regard, three parties have been detained for committing offenses under the GST Act. The directors/owners of M/s. Reema Polychem Pvt. Ltd. is two of them who have been on the run and have constantly avoided presence at DGGI Offices.

The third man is the director of M/s AB Players Exports Pvt Ltd and the manager of various other export firms/companies which have received IGST refunds on the basis of counterfeit invoices provided by these companies.

All three were detained by DGGI (Hqrs.) for committing offenses, pursuant to Sections 132(1)(b) and 132(1)(c) of the CGST Act, 2017, and ordered to be held under judicial custody by the Magistrate.

www.carajput.com; Prosecution in GST

www.carajput.com; Prosecution in GST

New Press Release issued by Ministry of Finance dated December 23, 2020, regarding Measures recommended by GST Council to curb fake dealers/invoice rackets notified. Release of the press That

  • Suspension based on data analytics and mismatches: Initiatives suggested by the GST Council to curb counterfeit dealers/invoice rackets made aware
  • Minimum cash payment to deter dummy businesses: Mandated by law 1 percent GST payment for all those risky dealers and fly-by-night operators who have uncommon large turnover and lack financial legitimacy
  • Tightening of the verification process for new registration: In-Person Confirmation must be performed for GST Registration, Identification of counterfeit dealers through data analysis, and suspension
  • Ease of doing business and precise targeting in the interest of small business intelligently protected.

Even more inquiries on the subject are in the process

GST Return compliances calendar- Nov 2020

SALIENT FEATURES OF NEW GST SYSTEM IN INDIA

Key points of 42nd GST council Meeting headed By FM N. Sitharaman

Disclaimer: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; before making any decisions do consult your Professional / tax advisor. For misrepresentation or interpretation of act or rules Author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. carajput.com is committed to helping entrepreneurs and small business owners to start, manage and grow their business with peace of mind. Our goal is to support the entrepreneur on legal and regulatory requirements and to be a partner throughout the entire business life cycle, offering support to the company at every stage to ensure that it is compliant and consistently growing. Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 09811322785/4 9555 5555 480)