Sisodia orders crackdown on bogus dealers registered under GST

Sisodia orders crackdown on bogus dealers registered under GST

Agency News

New Delhi, Jul 10: On the directions of Deputy Chief Minister and Finance Minister Manish Sisodia, the Department of Trade and Taxes has cracked down on bogus dealers registered under GST who are involved in issuance of fake invoices.

Mr Sisodia has reviewed the situation twice in last one month and ordered strictest possible action. As a First Step, the Department of Trade and Taxes has identified around 56,000 suspicious/risky dealers on various risk parameters. The Department, through GST Inspectors, has conducted Field verifications and inspections of 16,141 suspicious dealers so far. Out of it, 4618 dealers have been found non-existing/bogus during inspections.

These dealers are non-existing/bogus dealers who got registration in GST to defraud the government Exchequer by issue and use of fake invoices. A large number of GST fraud cases involving the use of fake invoices for wrong availment of Input Credit (ITC), which is further used to pay GST on Outwards Supplies has been detected since the roll out of GST by Trade and Taxes Department of Government of Delhi which is responsible for the implementation and enforcement of GST Act in Delhi.

The purpose of use of such fake invoices is the fraudulent availment/encashment of Input Tax Credit. The bogus entitles engaged in this activity also defraud other authorities such as Banks by deflating turnovers, laundering of money etc. The unscrupulous/bogus entitles engaged in such activities do not undertake actual trading of goods of services but involve in only paper transactions without physical delivery of goods/services. Delhi Government has taken the issue on top most priority and has started taken action against such dealers.

After their identification, Departmental Officers i.e. Assistant Commissioners and GST Officers have started taken stern action against these dealers in accordance with the provisions of GST Act & Rules.

Registration of 1282 dealers have been cancelled so far on this account and Show Cause Notices for Cancellation have been issued to 3221 dealers, of which proceedings are still underway. Besides it, 887 dealers are under the jurisdiction of Central Tax Authorities. Therefore, required Reports/information have been sent to them for taking further necessary action as per law input Tax Credit (ITC) of more Rs 128.30 crore has been blocked in respect of 1526 non-existing/bogus dealers so far, so that these dealers could not be able to avail the ITC wrongly.

Besides it, the State Tax Officers have also started field verifications/inspections of all the dealers who have made transactions (ie purchases of sales) from these bogus /non-existing dealers and required actions including cancellation of registration of such dealers is being taken up in this clean up exercise. Moreover, Tax Officers have started issuing Notices (DRC-01) for determination of Tax, Interest and Penalty under section 74 of GST Act to all such bogus dealers as well as other dealers who are making transactions with them so that the bogus ITC availed by those dealers would be rejected.

The Department has directed its Tax Officers to recover the entire amount of tax, interest & penalty from such dealers as well as to take other legal/criminal actions against such dealers.

The Delhi Government has decided to speed up the process of cracking down on all such bogus/non-existing dealers to eliminate issue and use of fake invoices from Delhi which is defrauding Government Revenue as well as spoiling healthy trade practices in Delhi. (UNI)