Across nearly a dozen commodities that have been considered evasion-prone, the Commercial Taxes Department has found out 285 newly registered taxpayers having obtained GST registrations fictitiously by submitting false or fabricated documents in the past four months alone. In all these cases, which were found during physical verifications, the taxpayers were non existent.
The action comes after the department deployed physical verification for the first time to identify such fraudulent GST registrations in the light of numerous instances of fraud that have been detected post GST.
Across trades
The verifications were taken up in trades, including areca, readymade garments, granite, marbles and tiles, electrical and electronic goods, iron and steel, cement, plywood and timber, automobile parts and hardware, among other things.
“Based on our past experience, we decided to physically verify the proof and address and identity of new registrations in evasion-prone commodities. Of the 4,935 dealers inspected between April and July, we found 285 taxpayers obtaining registrations by submitting false or fabricated documents. Some taxpayers did not exist too,” Commissioner of Commercial Taxes M.S. Srikar told The Hindu. Steps have been initiated to cancel these registrations, he added.
Photo for representation
In the past two years, the department has also cancelled about 43,300 registrations, including tax defaulters and bogus registrations. Since the GST rollout, there have been about 3 lakh new registrations, taking the total to 8 lakh registered taxpayers in the State from about 5 lakh in the VAT era.
Under the GST regime, registrations for new taxpayers are granted within three working days without any physical verification of the business premises and without ascertaining the veracity of documents uploaded by taxpayers. “This facility was extended to have ease of doing business. However, we found several cases of bogus e-way bill and input credit among others being created,” he added.
Physical verification
The physical verification, he said, would continue for all new registrations, and an exclusive android app has been developed by NIC to enable officers to upload information. Mr. Srikar also said that the department has been initiating action against those taxpayers who have purchased from non-existent taxpayers to disallow the input tax credit claims. “The transport of goods using e-way bills generated by newly registered taxpayers or their suppliers dealing in the evasion prone commodities have been kept under the watch list of the eway bill system,” he said.
BANGALORE,07/02/2010:Neighbourhood: Marbles and Granites shops at Sarjapur Road, on February 07,2010. Photo:V.Sreenivasa Murthy
Commercial lease/rent under scanner
In its bid to increase GST collections in the State, the Commercial Taxes Department is looking into commercial properties in Bruhat Bengaluru Mahanagara Palike region. The department has received information of about one lakh commercial properties based on property tax details. Under the GST regime, lease or rent on the property attracts a tax at the rate of 18%.
A hot steel slab exits the slab castor as it moves along a conveyor in the plate mill of the Jindal Steel & Power Ltd. plant in Raigarh, Chhattisgargh, India, on Wednesday, Feb. 11, 2015. Jindal Steel manufactures sponge iron, mild steel, and cement. The Company also produces power, conducts mining operations for iron ore and coal, and explores for natural gas and oil. Photographer: Udit Kulshrestha/Bloomberg
“We have started verifying these properties to understand the compliance rate. Many are self-owned or have a rent or lease of less than ₹20 lakh, categories which are exempted from GST,” Mr. Srikar said. “Though there has been compliance, the full understanding will be known in a few months. Officers are physically verifying the properties for compliance,” he added. He added that they will obtain transaction registration details from the Department of Registrations. PAN will help monitor tax compliance better, he added.
