Lok Sabha Question No. 159 (STARRED), answered on 2023-07-31
Subject: Cases of GST and Tax Evasion
Ministry: FINANCE
Asked by: Ranjanben Dhananjay Bhatt

## Government of India Ministry of Finance Department of Revenue

## LOK SABHA STARRED QUESTION NO.*159

TO BE ANSWERED ON MONDAY, JULY 31, 2023/ Sravana 9, 1945 (Saka)

## CASES OF GST AND TAX EVASION

## *159. SHRIMATI RANJANBEN DHANANJAY BHATT:

Will the Minister of Finance be pleased to state:

- (a) whether cases of GST and tax evasion are being noticed in different parts of the country;
- (b) if so, the details thereof; and
- (c) the steps taken or proposed to be taken by the Government to stop it?

## ANSWER MINISTER OF FINANCE (SMT. NIRMALA SITHARAMAN)

- (a) to (c):     A statement is placed on the Table of the House.

Statement  referred  to  in  reply  to  LOK  SABHA  Starred  Question  No.*159  for  answer  on  31 st JULY, 2023 raised by SHRIMATI RANJANBEN DHANANJAY BHATT regarding 'Cases of GST And Tax Evasion'.

- (a) & (b): Whenever any instance of GST and Tax evasion comes to the notice, the respective agencies take appropriate actions against such tax evader(s).
-  The statistics on surveys, searches & seizures done by Income Tax Department in the last 5 years are as under:
-  The statistics on prosecutions filed by the Income Tax Department during the last 5 years are as under:
-  Trends in overall GST evasion detected for the last three years are as under:
-  Cases  of  Outright  smuggling*  detected  by  Department  of  Customs  in  the  last  4  years (including current F.Y.) are as under:
-  Cases  of  Commercial  Frauds  by  Department  of  Customs  in  last  4  years  (including current F.Y.) are as under:

| Financial Year   | Search &Seizure           | Search &Seizure                    | Surveys                  |
|------------------|---------------------------|------------------------------------|--------------------------|
|                  | Number of groups searched | Total assets seized (In Rs. crore) | No. of Surveys Conducted |
| 2018-19          | 966                       | 1567.07                            | 15401                    |
| 2019-20          | 984                       | 1289.47                            | 12720                    |
| 2020-21          | 569                       | 880.83                             | 426                      |
| 2021-22          | 686                       | 1159.59                            | 1046                     |
| 2022-23          | 741                       | 1765.56                            | 1253*                    |

| Financial Year   |   No. of cases in which prosecution complaints filed |   No. of Cases compounded |   No. of persons convicted |
|------------------|------------------------------------------------------|---------------------------|----------------------------|
| 2018-19          |                                                 3512 |                      2235 |                        105 |
| 2019-20          |                                                 1226 |                      1410 |                         49 |
| 2020-21          |                                                  173 |                       558 |                         16 |
| 2021-22          |                                                  195 |                       468 |                         11 |
| 2022-23          |                                                  387 |                       627 |                         69 |

| Year                     |   Total No. of cases |   Detection (Rs. in Cr.) |   Recovery (Rs. in Cr.) |   No. of Arrest |
|--------------------------|----------------------|--------------------------|-------------------------|-----------------|
| 2020-21                  |                12596 |                    49384 |                   12235 |             460 |
| 2021-22                  |                12574 |                    73238 |                   25156 |             342 |
| 2022-23                  |                15562 |                   131613 |                   33226 |             190 |
| 2023-24 (upto May, 2023) |                 2784 |                    14302 |                    5716 |              28 |

| Period                  | No. of cases   | Value (in Rs. Crores)   |
|-------------------------|----------------|-------------------------|
| 2020-21                 | 10,318         | 2,740.80                |
| 2021-22                 | 12,755         | 20,265.26               |
| 2022-23                 | 16,695         | 21,927.99               |
| 2023-24 (upto may 2023) | 2,986          | 1,031.59                |

| Period                  | No. of cases   | Values (in Rs. Crore)   | Duty Involved (in Rs. Crores)   |
|-------------------------|----------------|-------------------------|---------------------------------|
| 2020-21                 | 3,018          | 6,157.60                | 8,850.26                        |
| 2021-22                 | 3,033          | 60,764.80               | 6,052.35                        |
| 2022-23                 | 5,514          | 14,371.59               | 4,957.61                        |
| 2023-24 (upto may 2023) | 694            | 1,695.16                | 1,365.24                        |

## (c) Details of various steps undertaken by the government to stop GST and Tax evasion are as under:

## (i): Income Tax:-

- (a) With the availability of information in electronic form, the Income Tax Department has developed  a  wide  range  of  non-intrusive  methods  for  detecting  tax  evasion.  Some  of  the important  measures  include-Computer Assisted Scrutiny  Selection  (CASS) for  selection  of cases for Scrutiny; Non-filers Monitoring System (NMS) to prioritise action on non-filers;

Income Tax Business Application (ITBA) to help in curbing tax evasion through putting in place end to end processes for all verticals of the Department etc.

- (b) Extensive  use of information technology  and  data analytics tools also helps in identification of high-risk cases, expeditious e-verification of suspect cases and enforcement actions in appropriate cases.
- (c)  The  Income  Tax  Department  collects  information  on  Specified  Financial  Transactions (SFT),  above  notified  thresholds,  relating  to  cash  deposits,  credit  card  payments,  purchase and sale of properties, purchase of shares and mutual funds etc. Such information is collected, collated and analyzed for computer aided scrutiny and risk profiling of taxpayers, identification of non-filers and stop filers etc.
- (d)  Whenever  there  is  any  credible  information  with  regard  to  evasion  of  direct  tax,  the Income  Tax  Department  takes  timely  and  concerted  action  in  the  form  of  search,  seizure, survey etc., as per law.
- (e) Enactment of the Benami Transactions (Prohibition) Amendment Act, 2016 to amend the Benami Transactions (Prohibition) Act, 1988 with a view to, inter alia, enable confiscation of benami property and prosecution of benamidar and the beneficial owner.
- (f)  The  Government has brought in a large number of legislative provisions in the Income Tax Act, 1961 to effectively tackle the menace of black money. For eg. restriction on cash transaction of Rs. 2 lakh or more, no deduction under section 80G allowed if cash donation

exceeds  Rs.  2000,  and  restriction  imposed  on  donations  of  Rs.2000/-  or  more  to  political parties otherwise than by a bank account or through electoral bonds etc. Money  under

- (g) Constitution of the Special Investigation Team (SIT) on Black Chairmanship and Vice-Chairmanship of two former Judges of Hon'ble Supreme Court,
- (h) Mandatory linking of Aadhaar with PAN, which will not only help in de-duplication of PAN but will also prevent potential tax frauds and money-laundering.

## (ii): GST:-

1. Using  robust  data  analytics  and  artificial  intelligence  to  identify  and  track  risky taxpayers and detect tax evasion;
2. Carrying  out  special  all  India  drive  to  weed  out  fake/bogus  registrations  from 16.05.2023 to 15.07.2023;
3. Insertion of sub-rule (4A) in rule 8 of CGST Rules, 2017 to provide for biometricbased Aadhaar authentication of registration applicants who appear to be risky based on data analytics;
4. Amendment in rule 9 of CGST Rules, 2017 to provide for physical  verification  in high-risk cases, even when Aadhaar has been authenticated;
5. Amendment in rule 10 A of CGST Rules, 2017 to provide for requirement of bank account furnished as a part of registration process to be in the name of the registered person and  obtained  on  PAN  of  the  registered  person  and  also  linked  with  Aadhaar  in  case  of proprietorship  firm.  Also,  the  GST  Council  in  its  50 th meeting  has  recommended  further amendment in rule 10A to provide that the details of bank account  will  be  required  to  be furnished within 30 days of grant of registration or before filing of  GSTR-1, whichever is earlier;
6. Restriction on availment of ITC to invoices and debit notes furnished by the supplier in their statement of outward supplies;
7. Sharing of data with partner law enforcement agencies for more targeted interventions;
8. Reduction in threshold limit for issue of e-invoice for B2B transactions from Rs. 10 crore to Rs. 5 crore w.e.f. 01.08.2023;
9. Restriction on generation of e-way bills by non- compliant taxpayers;
10. Making the beneficial owner liable for penal action and prosecution similar to that of actual supplier/recipient, in cases where a supply has been made without the issuance of an invoice, or invoice has been issued without supply, or excess ITC has been availed/distributed; and
11. Amendment in Section 83 of the CGST Act to provide that provisional attachment of property  can  be  done  in  respect  of  any  other  person  who  has  retained  benefits  of  such transactions.

## (iii): Customs:-

CBIC through its customs field formations, along with DRI, is actively engaged in detecting and curbing import-export related commercial frauds. Data analysis based risk management and  intelligence  development  along  with  human  intelligence  are  being  employed  by  said formations to gather actionable intelligence, which has resulted in substantial detections of tax evasion in recent years. On the basis of investigations conducted, alerts and modus operandi circulars are being issued from time to time to sensitise other Customs field formations and risk management teams about potential risk parameters so that necessary vigil and safeguards may be put in place in a timely manner.

*****