GST Authorities To Resume Follow-up Investigations on Fake ITC Claims

The Goods and Services Tax (GST) authorities plans to resume its follow-up investigations on over 1.25 lakh entities till December, Moneycontrol reported quoting a senior government official. The move is intended to prevent tax revenue loss. The joint operation by the central and state authorities is expected to uncover more bogus companies, the report said. The Central Board of Indirect Taxes and Customs (CBIC) is working with the central and state governments to investigate bogus companies across the country.

“This follow-up investigation will continue till CBIC verifies all the entities which received the supply of fake bills. It may go on till December end. In the follow-up, if the authorities come across more companies, the investigation will go to the level two in the supply chain,” an official said.

Manufacturers and service providers can claim input tax credit (ITC) on their input costs. However, some firms allegedly create fake invoices to evade GST, which can lead to revenue loss for the government. The Central Board of Indirect Taxes and Customs (CBIC) had detected fake credits worth of 63000 crore in their first stage of operation.

“The revenue department is doing follow-up investigations now. This is after the first stage of the special drive. Now, we have to check to whom the supplies of the fake ITCs were made. References are being made to verify level 1 and 2 of the fake ITC chain,” the report said quoting the official.

In their two months special investigation conducted during June Quarter, CBIC verified 1.25 lakh entities, out of which 20,800 were bogus.

“Originally 77,200 entities were identified as risky, and follow-up investigations were done on more than 1.25 lakh entities,” he said.

CBIC also plans to hold a review meeting with central and state GST officials to discuss the investigation findings. The authorities are adjudicating the findings and will determine liabilities based on evidence, the report said.