GST Council’s recommended measures to curb fake dealers/invoice rackets notified

New Delhi, Dec 23 : Now GST registrations will have in-person verification before registration is granted to any applicant.
The Centre on Tuesday evening notified the recommendations of the Law Committee of the GST Council in order to control the menace of GST fake invoice frauds. Already the government has launched a major nation-wide crackdown in the fake invoice case that so far has resulted in the arrest of 164 fraudsters, including 5 chartered accountants and a woman, in over a month, besides filing of 1,768 cases against 5,745 GSTIN entities.
The Law Committee recommendations as notified are central to four key themes, namely – tightening of verification process for new registrations, suspension based on data analytics and mismatches, minimum cash payment to deter dummy businesses and ease of doing business and precise targeting in the interest of small business intelligently protected.
The notified measures, as approved by the GST Implementation Committee (GIC) and deliberated among the 10 states’ members and the Centre’s representatives in the GSTC’s Law Committee during several rounds of discussion, would, on one hand, help to tackle the menace of fake invoices for availing and passing on of input tax credit (ITC) by fraudsters and on the other hand, simultaneously would ensure that there is no impact on the Ease of Doing Business which is achieved in GST through liberal registration, refund regime and self-compliance system with little or no manual checks.
The major recommendation of the Law Committee of GST Council is for controlling the fresh or new registration taken by the applicants without business purpose and for weeding out the existing fake dealers from the systems.
Measures, hence, notified towards systemic tightening of new registration by identifying fake dealers, modifications in the registration process, use of Aadhaar during registration and Aadhaar-like capturing of details during registration would impact the menace of mushrooming fake firms and ITC fraud by fly-by-night operators.