Nov. 22, 2020, 8:41 p.m.
New Delhi: The Law Committee of the GST Council after its intense deliberations spread over two days’ on the issues of GST fake invoice frauds has suggested two-pronged manifold measures that would warrant on the one hand to tackle the menace of fake invoices and ineligible availment and passing on of input tax credit (ITC) by unscrupulous fraudsters.
It would also ensure not to impact the ease of doing business provided by the GST’s liberal registration and refund regime, and simple self-compliance system with little checks, said the Sources in the Department of Revenue (DoR).
Sources said that the urgent need to work out certain modifications in GST Rules is evident from the fact that within ten days of a nationwide drive against the GST fake invoice frauds, the DGGI and CGST Commissionerates have so far arrested 48 persons including one woman and 3 Chartered Accountants and have booked 648 cases besides identifying 2385 entities.
According to sources, the Law Committee while suggesting systemic tightening, some modification in the registration process, use of Aadhaar and Aadhaar like registration modus opus, etc., faced the biggest challenge to work out solutions which would not be impacting Ease of Doing Business although would effectively control the menace of fake firms and fly-by-night operators.
The Law Committee has come out with the measures which are taken on precise identification of potentially riskier taxpayers based on very well defined parameters run on the automated environment, thus would not be impacting Ease of Doing Business for genuine taxpayers, businesses entities and traders.
Sources said that the Law Committee of GST Council has suggested two- pronged strategy- one, for the fresh or new registration applicants and other, for weeding out of existing fake dealers from the systems. Law Committee has also suggested discussing these measures with States and other stakeholders before putting it formally to GST Council for further necessary action.
Sources said that the Law Committee in its considered view has suggested that new or fresh registration in GST may adopt Aadhaar like registration process under which new registration can be done online with live photo and use of biometrics with due verification of documents.
Such facilities can be provided at banks, post offices, and GST Seva Kendras (GSKs) just like Passport Seva Kendras or Aadhaar Seva Kendras. The GSKs can work on the pattern of Passport Seva Kendras to provide new registration facilities with required checks on fake registration.
According to Sources, the Law Committee has suggested that a fresh registrant must go for compulsory physical verification and personal identification in case s/he opts for non-Aadhaar authentication based registration process and do not have income-tax return supported adequate financial capability. In such a case, s/he may have to submit recommendation letter by two taxpayers of adequate reliability.
Further, also, if on the basis of document supported credentials, a registrant/dealer falls in ‘trustworthy’ category then s/he can be given registration within 7 working days; and if s/he is not in the ‘trustworthy’ category then conditional registration shall be given within 60 working days only after physical verification of the place of business wherein in such cases input tax credit to their buyers shall be allowed only after filing of their return and the dealer/s would be required to pay certain portion of their liability in cash instead of paying 100% tax through ITC.