Union Finance Ministry, CBIC bust myths over proposed changes to curb fake GST invoices

The Central Board of Indirect Taxes and Customs (CBIC) on Wednesday issued a notification clarifying misinformation and myths surrounding the new CGST Notification on GST fake invoice frauds. This comes in response to the Ministry's strong crackdown on businesses and persons with fake GST invoices which has resulted in the arrests of 165 persons in the last 6 weeks. Additionally, GST investigation arm DGGI has registered 350 cases for issuing fake invoices against 1,180 entities across Delhi, Bengaluru, Mumbai, Chennai, and several other cities, causing alarm amid businesses. 

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3 myths busted

Busting the first myth, the Finance Ministry stated that a GST registration would only be cancelled if more than 6 returns were not filed. "The GST laws passed by the Parliament and state legislatures provide that GST registration is liable to be cancelled for those who have not filed 6 or more returns. It is, therefore, wrong to say that the cancellation will be done without reasons," it said.

The second myth came around cancelling of license on account of clerical errors. To this, the Ministry said, "Only in fraudulent cases where there are significant discrepancies based on data analytics and sound risk parameters, and not mere clerical errors, the action of suspension and cancellation will be taken up."

The third myth centred around the proposed changes in the system and whether they would in turn impact the ease of doing business. "Precise targeting of fraudsters is being done only in specific cases, after doing a comprehensive analysis, using advanced data analytics tools. etc. Further, multiple risk indicators are checked and only then few high-risk entities are selected," said the Ministry.

Fake invoices are not only used for evading GST but can also be used to claim higher GST refund, MEIS incentives. There is a high risk of invoice scams being undertaken by businesses to obtain higher loans from banks, siphon loan money through hawala, and inflate imports and exports.

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(With Agency Inputs)