Lok Sabha Question No. 144 (STARRED), answered on 2020-03-02
Subject: Irregularities in GST
Ministry: FINANCE
Asked by: Komati Reddy Venkat Reddy

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE LOK SABHA

## STARRED QUESTION No. 144

TO BE ANSWERED ON MONDAY, MARCH 2, 2020/PHALGUNA 12, 1941 (SAKA)

## IRREGULARITIES IN GST

## *144. SHRI KOMATI REDDY VENKAT REDDY:

Will the Minister of FINANCE be pleased to state:

- (a) whether the Government has taken a decision to regulate the false claims and other irregularities in the Goods and Services Tax (GST);
- (b) if so, the details thereof; and
- (c) the details of the submissions made by the authorities of the State Governments in this regard?

## ANSWER MINISTER OF FINANCE

(Ms. NIRMALA SITHARAMAN)

- (a) to (c) A Statement is laid on the table of the House.

## STATEMENT AS REFERRED TO IN REPLY TO PARA A TO C OF LOKSABHA STARRED QUESTION NO.144 FOR ANSWER ON 2 nd  MARCH,2020/PHALGUNA 12, 1941 (SAKA)REGARDING IRREGULARITIES IN GST.

Part (a) and part (b): Yes Sir. To identify cases of fraudulent claims under GST, the Government has taken measures to apply stringent risk parameters-based checks driven by rigorous data analytics and Artificial Intelligence (AI) tools based on which certain taxpayers  are  identified  whose  exports  and  supply  chain  are  subjected  to  rigorous checks. Moreover, in order to facilitate exports, a standard operating procedure has been prescribed  for  exporters  vide  Circular  No.  131/1/2020-GST  dated  23.01.2020  to mitigate  the  risk  of  wrongful  refund  claims  of  IGST  (Integrated  Goods  and  Services Tax).

To curb cases of wrongful claims of input tax credit, sub-rule (4) of rule 36 has been inserted to Central Goods and Services Tax Rules, 2017 vide notification No. 49/2019 Central  Tax  dated  09.10.2019.  Vide  notification  No.  75/2019  -  Central  Tax  dated 26.12.2019,  rule  86A  has  been  inserted  to  CGST  Rules,  2017  which  empowers  tax officer,  not  below  the  rank  of  Assistant  Commissioner,  to  block  input  tax  credit available in the electronic credit ledger of a taxpayer if he has reasons to believe that such credit is ineligible or has been availed fraudulently.

Part  (c): Various  submissions  have  been  made  by  the  authorities  of  the  State Governments in this regard, inter-alia, including the following:

- i. E-way bill verification should be undertaken by tax officers with special watch for  inter-State  transactions.  Task  forces  consisting  of  State  and  Central  GST authorities need to be set up to undertake such verification.
- ii. Emphasis should be placed on enforcement.
- iii. In order to weed out bogus registrations obtained by unscrupulous persons on the basis of false documents, it has been suggested to encourage tax officers to visit the premises of taxpayers/dealers post registration to verify their genuineness.
- iv. The mechanism of 'invoice matching' should be implemented as it would go a long way in curtailing cases of input tax credit frauds.
- v. A robust reporting system should be put in place to generate real time tax alerts on detection of any suspicious and fraudulent transactions.

Based on the valuable feedback and suggestions received from  multiple stakeholders including State Governments, the GST Council makes recommendations and necessary action is taken by the Government.

*****