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itc: DGGI finds 8k fraud ITC claim cases


The director general of goods and services tax intelligence (DGGI) has detected about 8,000 cases of fraudulent input tax credit claims and is in the process of sending out notices to the entities involved.

“Data analytics have helped us detect a large number of cases of mismatch between form GSTR 3B and GSTR 2A and we have sent notices to about 5,000 businesses,” a senior government official told ET.

A large number of these entities were found to have suppliers with GST registrations based on fake documents or were engaged in supply of fake invoices. In some cases, the input tax credit (ITC) was claimed on the basis of suppliers whose GST registration was already cancelled or were found to be shell firms.

Out of the notices sent, about 1,500 companies have tax demand notices over ₹100 crore, including penalty and interest. ET has seen some tax demand notices.

The notices were sent after May 15 for the discrepancies relating to fiscal year 2020-21 and fiscal year 2021-22.

“Matching concept of inputs received (tax paid by vendor) and credit availed is an important aspect to track fraudulent transactions. However, the concept must not deny the benefit to genuine taxpayers due to procedural infirmities as credit is a vested right,” said Abhishek A Rastogi, founder of Rastogi Chambers.Officials said that generally mismatches happen when the supplier has not filed the return or has uploaded an invoice after the due date of filling or where for any reason they file delayed return. In such cases the law restricts the claim of input tax credit only to the extent of input tax credit appearing in the GSTR-2A. They can claim pending credit only when the supplier files a late return after paying interest. Officials take a lenient view in such cases when the discrepancies are explained with documentation and valid reasons. However, in the above notices, officials said that the suppliers never filed any proper return and they were linked to companies with records of providing fake invoices, without supply of services or goods.

GSTR-3B is basically a summary return of outward supplies and input tax credit claimed along with taxes paid. GSTR 2A is an automatic return generated for a taxpayer from his seller’s GSTR-1.

The GST authorities carried out a two-month drive, which concluded on July 16, to crackdown on companies and syndicates involved in the supply of fake bills and invoices to avail credit. Authorities have now started the second phase of the exercise in which they will go after entities that availed fake invoices from the fraudulent supplier companies.

DGGI Finds 8k Fraud ITC Claim Cases


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