Introduction:
The document titled ‘Instruction No. 02/2024-GST,’ issued by the Ministry of Finance, Central Board of Indirect Taxes & Customs (CBIC), GST Policy Wing on August 12, 2024, outlines a strategic initiative for a second special All-India drive against fraudulent GST registrations. This initiative is a continuation and expansion of a previous drive conducted in 2023 and is aimed at identifying and eliminating suspicious or fake GST Identification Numbers (GSTINs) to safeguard government revenue.
Context and Background: The document references the success of a similar drive in 2023, which was found to be effective in identifying and removing fake registrations. Given the ongoing threat posed by fraudulent registrations and the issuance of bogus invoices, the National Coordination Committee recommended a second, more focused drive. This decision underscores the persistent challenges faced by tax authorities in maintaining the integrity of the GST system, which is crucial for preventing tax evasion and ensuring a fair tax base.
Objective of the Drive: The primary objective of this second special drive is to clean up the GST ecosystem by identifying and eliminating fraudulent GSTINs, thereby preventing revenue loss to the
government. The drive aims to:
- Detect and cancel non-existent or fictitious GST registrations.
- Block the Input Tax Credit (ITC) passed on by these fake entities to genuine
taxpayers. - Recover taxes from entities that have wrongly availed ITC.
- Ensure coordinated action across different tax jurisdictions.
Key Components of the Instruction:
- Period of the Special Drive:
The drive will be conducted from August 16, 2024, to October 15, 2024. During this period, both Central and State Tax administrations will work in tandem to identify and verify suspicious GSTINs. - Identification of Suspicious GSTINs:
The GST Network (GSTN), in coordination with the Directorate General of Analytics and Risk Management (DGARM), will use data analytics and risk parameters to identify highrisk GSTINs. These GSTINs will be shared with the relevant tax authorities for verification. In addition to the GSTN-provided list, tax authorities may use their own data analysis tools and intelligence sources to identify additional suspicious GSTINs. - Action by Field Formations:
Upon receiving the list of suspicious GSTINs, tax officers are required to conduct a timebound
verification process. If a GSTIN is found to be fraudulent, immediate actions will be taken, including:
- Suspension and cancellation of the registration under Section 29 of the CGST Act. Blocking of ITC in the Electronic Credit Ledger under Rule 86A of the CGST Rules. nitiation of demand and recovery actions for wrongly availed ITC. If the recipients of ITC linked to the fake GSTIN are under a different jurisdiction, the details will be shared with the relevant tax authority for further action.
- Coordination and Nodal Officers:
To ensure effective communication and coordination across jurisdictions, nodal officers will be appointed in each CGST Zone and State. These officers will facilitate the exchange of information between tax jurisdictions using the GSTN Back Office Portal’s ‘Initiate Enquiry’ functionality. - Monitoring and Reporting:
The progress of the drive will be closely monitored through weekly reports submitted by the tax authorities. These reports will detail the number of GSTINs verified, the amount of tax evasion detected, the amount recovered, and any novel fraud schemes uncovered during the drive. The GST Council Secretariat will compile and review these reports, and the National Coordination Committee will assess the overall effectiveness of the drive.
- Feedback and Outcome Evaluation:
A feedback mechanism is established where field formations will report back on the outcomes of their actions, including whether the identified leads were accurate and what enforcement actions were taken. The document also outlines the need to identify the masterminds behind the fake
registrations and to take further enforcement actions, including provisional attachment of properties and bank accounts under Section 83 of the CGST Act.
Analysis of Implementation Strategy:
The implementation strategy outlined in this instruction is comprehensive, with a clear focus on coordination, communication, and systematic action. The use of advanced data analytics to identify high-risk GSTINs, combined with the structured approach to verification and enforcement, is designed to ensure that the drive is both effective and efficient.
Challenges and Considerations: - Inter-Jurisdictional Coordination:
One of the key challenges is ensuring seamless coordination between different tax jurisdictions, particularly when dealing with fraudulent entities that operate across state borders. The appointment of nodal officers and the use of the GSTN Back Office Portal for information sharing are crucial steps in addressing this challenge. - Timely and Effective Enforcement:
The success of this drive depends heavily on the ability of tax officers to carry out timely verifications and enforce actions against fraudulent GSTINs. This requires adequate resources, training, and the capacity to handle potentially large volumes of cases within the stipulated timeframe. - Risk of Genuine Taxpayers Being Affected:
There is a risk that genuine taxpayers may be inadvertently affected by the aggressive
actions taken during the drive, particularly in cases where ITC is blocked or registrations
are canceled without sufficient cause. It is important for tax authorities to ensure that
actions are based on solid evidence and that there is a mechanism for taxpayers to challenge
wrongful actions.
- Detection of Novel Fraudulent Schemes:
The instruction emphasizes the importance of identifying new methods used by fraudsters to evade taxes. This requires a dynamic approach where tax authorities remain vigilant and adaptive to emerging threats, potentially involving continuous updates to data analytics models and enforcement strategies.
Conclusion:
Instruction No. 02/2024-GST represents a proactive and structured approach by the Indian
government to tackle the issue of fake GST registrations and safeguard government
revenue. The detailed guidelines for identification, verification, enforcement, and reporting
ensure that the drive is systematic and coordinated across the country. While challenges
such as inter-jurisdictional coordination and the risk of affecting genuine taxpayers exist,
the robust framework provided in the instruction, if implemented effectively, can
significantly clean up the GST ecosystem and enhance compliance.
This drive is an essential step in maintaining the integrity of the GST system and ensuring
that it serves its purpose of creating a transparent and fair tax environment in India.
Instruction No. 02/2024-GST
F. No. CBIC- 20/16/30/2020-GST
Government of India
Ministry of Finance
Department of Revenue
Central Board Indirect Taxes & Customs,
GST Policy Wing
New Delhi, dated the 12th August 2024
To,
All t h e Principal Chief Commissioners/ Chief Commissioners/ Principal
Commissioners /Commissioners of Central Tax
All the Principal Directors General/ Directors General of Central Tax
Madam/Sir,
Subject: Guidelines for Second special All-India Drive against fake registrations– regarding.
Attention is invited to the Instruction No. 01/2023-GST dated 04.05.2023 vide which guidelines were issued for conducting a special All-India drive during the period from 16th May 2023 to 15th July 2023 (which was further extended till 14th August 2023), for verification and detection of suspicious/ fake registrations and for taking timely remedial action to prevent any further revenue loss to the Government. A National Coordination Committee headed by Member (GST), CBIC and including the senior officers from different States and Centre was also formed to take decisions and monitor the progress of this special drive.
1.2 A meeting of the said National Co-ordination Committee was held on 11th July 2024, wherein it was discussed that the special All-India drive conducted during the year 2023, was found quite effective in weeding out fake registrations. The Committee felt that there may be a need for further focused and coordinated action by Central and State tax authorities to clean up the tax base and to take concerted action against the fake registrations and fake/bogus invoices, on the same pattern as was done during the said drive. It was, therefore, decided that a second special All-India drive against fake registrations may be conducted by all Central and State tax authorities for a period of two months starting from 16th August 2024.
1.3 The National Co-ordination Committee also decided that like the previous drive, a set of common guidelines may be issued to ensure uniformity in action by the field formations and for effective coordination and monitoring of the action taken during this special drive.
- In the light of above, in partial modification of the Instruction No. 01/2023-GST dated
04.05.2023, the following guidelines are issued for such concerted action on suspicious/ fake registrations during the special All-India drive during this year:
a) Period of Special Drive:
The second Special All-India Drive may be launched by all Central and State Tax administrations from 16th August 2024 to 15th October 2024 to detect suspicious/ fake GSTINs and to conduct requisite verification and further remedial action to weed out these fake billers from the GST eco-system and to safeguard Government revenue.
b) Identification of fraudulent GSTINs:
GSTN, in coordination with Directorate General of Analytics and Risk Management (DGARM), CBIC, will identify suspicious/ high-risk GSTINs, based on detailed data analytics and risk parameters, for the purpose of verification by the State and Central Tax authorities during the said drive and share the details of such suspicious GSTINs, jurisdiction wise, with the concerned tax administration. In case of such suspicious GSTINs falling under the jurisdiction of Central Tax, the details will be shared with the Central Tax authorities by GSTN through DGARM. Besides, the State and Central Tax
Authorities, may, at their own option, supplement this list by data analysis/ intelligence athering at their end, using various available analytical tools like BIFA/ GAIN, ADVAIT, NIC Prime, E-Way Bill Analytics etc., as well as through human intelligence, modus operandi alerts, experience gained through the past detections, as well as the first special All-India drive.
c) Action to be taken by field formations:
i. On receipt of data from GSTN, a time bound exercise of verification of the suspicious GSTINs shall be undertaken by the concerned jurisdictional tax officer(s). If, after detailed verification, it is found that the taxpayer is nonexistent and fictitious, then the tax officer may immediately initiate action for
suspension and cancellation of the registration of the said taxpayer in accordance with the provisions of section 29 of CGST Act, read with the rules thereof.
ii. Further, the matter may also be examined for blocking of input tax credit in Electronic Credit Ledger as per the provisions of Rule 86A of CGST Rules without any delay. Additionally, the details of the recipients to whom the input tax credit has been passed by such non-existent taxpayer may be
identified through the details furnished in FORM GSTR-1 by the said taxpayer.
iii. Where the recipient GSTIN pertains to the jurisdiction of the said tax authority itself, suitable action may be initiated for demand and recovery of the input tax credit wrongly availed by such recipient on the basis of invoice issued by the said non-existent supplier, without underlying supply of goods or services or both.
iv. In cases where the recipient GSTIN pertains to a different tax jurisdiction, the details of the case including the details of the recipient GSTIN, along with the relevant documents/ evidence, may be sent to the concerned tax authority, as early as possible, in the format mentioned in Annexure-B. For sharing such details/ information and coordination with other tax authorities, GSTN Back Office has an online functionality, namely, ‘Initiate Enquiry’ in the Enforcement module, which is available to all tax officers who have been assigned the role of ‘Enforcement Officer’ on the Back Office (BO Portal). v. For the purpose of communicating this information to the recipient tax jurisdiction, a nodal officer shall be appointed immediately by each of the Zonal CGST Zone and State. The name, designation, phone number/ mobile number and E-mail Id of such Nodal officer(s) appointed by CGST Zones and States must be shared by the concerned tax authority with GST Council Secretariat within three days of issuance of this letter. GST Council Secretariat will compile the list of the Nodal officers after procuring the details from all the tax administrations and will make the compiled list available to all the tax jurisdictions and to GSTN. vi. The nodal officer of the tax jurisdictions may be assigned the role of ‘Enforcement Officer’ on the BO Portal. Wherever the details of the recipient GSTIN needs to be shared to other tax jurisdiction, the same may be done through the nodal officer. The said nodal officer will accordingly share the information about the recipient GSTIN with the nodal officer of the concerned recipient tax administration, through the said functionality, attaching a pdf document in the format mentioned in Annexure-B. The nodal officer of the recipient tax administration will further share the details with the concerned jurisdictional tax officers, for necessary action. vii. GSTN will issue detailed guidelines/ advisory regarding usage of this functionality, which may be referred to. viii. Action may also be taken to identify the masterminds/ beneficiaries behind such fake GSTIN for further action, wherever required, and also for recovery of Government dues and/ or provisional attachment of property/ bank accounts, etc. as per provisions of section 83 of CGST Act. Further, during the investigation/ verification, if any linked suspicious GSTIN is detected, similar action may be taken/ initiated in respect of the same. d) Feedback and Reporting Mechanism:
i. An action-taken report in the format enclosed as Annexure-A (for GSTINs identified by GSTN and those identified locally) and Annexure-A1 (for those GSTINs received from other tax administrations through ‘Initiate Enquiry’ module) will be uploaded by each of the State as well as CGST Zones, through the nodal officer referred to in para 2(c)(v), on the portal provided for the same, on a weekly basis on the first working day after completion of the week, for enabling the GST Council Secretariat to monitor the same.
ii. If any novel modus operandi is detected during the verification/ investigation, the same may also be indicated in the said action taken report. On conclusion of the drive, GSTIN-wise feedback on the result of verification of the suspicious GSTINs shared by GSTN, will be provided by the field formations through the nodal officer to GSTN, as per the format enclosed in Annexure-C.
3. The Principal Chief Commissioner/ Chief Commissioner of the Central GST Zones and
the Chief Commissioner/ Commissioner of the States/ UTs may monitor the progress of action
taken in respect of list of suspicious GSTINs received from GSTN and chosen locally. The
action taken in respect of the GSTINs received from other tax administrations through the
‘Initiate Enquiry’ module may also be monitored.
4.GST Council Secretariat will compile the reports received from various formations and
make it available to the National Coordination Committee immediately. The unique modus
operandi found during this special drive will be compiled by GST Council Secretariat and
presented before National Coordination Committee, which will be subsequently shared with
Central and State Tax administrations across the country.
5.Difficulties, if any, in the implementation of these instructions may be brought to the
notice of the Board (gst-cbec@gov.in).
Sanjay Mangal
Principal Commissioner (GST)
Enclosure: As above
Copy to:
The Joint Secretary, GST Council Secretariat, New Delhi for information and
necessary action. She is also requested to immediately take up with the Chief
Commissioners/ Commissioners of State Tax of various States/ UTs for similar
action at their end.
Copy for information and necessary action to:
- The CEO, GSTN, New Delhi
- The Additional Director General, DGARM, New Delhi
