Lok Sabha Question No. 686 (UNSTARRED), answered on 2023-07-24
Subject: Fraudulent Cases of GST Registration
Ministry: FINANCE
Asked by: Sambhajirao Mane Dhairyasheel, Shrirang Appa Barne, Bidyut Baran Mahato, Sanjay Sadashivrao Mandlik, Sudheer Gupta, Prataprao  Jadhav

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE LOK SABHA UNSTARRED QUESTION NO. 686

To be answered on Monday, July 24, 2023/Sravana 2, 1945 (Saka)

## 'FRAUDULENT CASES OF GST REGISTRATION'

## 686. SHRI DHAIRYASHEEL SAMBHAJIRAO MANE:

SHRI SHRIRANG APPA BARNE:

SHRI BIDYUT BARAN MAHATO:

SHRI SANJAY SADASHIVRAO MANDLIK:

SHRI SUDHEER GUPTA:

SHRI PRATAPRAO JADHAV:

## Will the Minister of FINANCE be pleased to state:

- (a)  whether  fraudulent  cases  of  GST  registration  by  misusing  PAN  and  Aadhaar details of other people to claim Input Tax Credit (ITC) has come to the notice of the Government and if so, the details thereof, State-wise;
- (b)  whether  Central  Board  of  Indirect  Taxes  and  Customs  (CBIC)  is  planning  to implement biometric authentication and geo-tagging of risky entities under GST in the country;
- (c)  if so, the details thereof and progress made in this regard;
- (d) the time by which it is likely to be implemented;
- (e) the total number of bogus entities identified by the Government during the CBIC's ongoing drive against fake registration across the country during the current year; and
- (f) the details of other measures taken/being taken by the CBIC to verify the identities of  individual's  connected  to  the  businesses  suspected  of  fraudulent  activity  and who are claiming fake Input Tax Credit?

## ANSWER MINISTER OF STATE IN MINISTRY OF FINANCE (SHRI PANKAJ CHAUDHARY)

- (a) Yes Sir.  The  details  of  cases  booked  by  Central  GST  administration  during  the period from 01.07.2017 to 30.06.2023 are as under:

| State/UT       |   No. of fraudulent cases of GST registration by mis-using PAN/AADHAAR details of other people to claim ITC |   Detection (Rs. in Crore) |   Recovery/ Realization (Rs. in Crore) |   Arrests made in such cases |
|----------------|-------------------------------------------------------------------------------------------------------------|----------------------------|----------------------------------------|------------------------------|
| Andhra Pradesh |                                                                                                          91 |                      47.23 |                                   5.53 |                            3 |
| Assam          |                                                                                                          80 |                     383.03 |                                  25.39 |                            3 |

| Bihar            |   65 |   454.91 |      0 |   0 |
|------------------|------|----------|--------|-----|
| Chandigarh       |    3 |    10.64 |   0    |   2 |
| Chhattisgarh     |   36 |   491.64 |   0    |   7 |
| Delhi            |  713 |  4326.39 | 159.01 |  43 |
| Goa              |    1 |     0.04 |   0    |   0 |
| Gujarat          |  570 |  2902.5  | 102.78 |  45 |
| Haryana          |  265 |   230.82 |   1.92 |   5 |
| Himachal Pradesh |    2 |     0.92 |   0.92 |   0 |
| Jammu &Kashmir   |    2 |     0.14 |   0    |   0 |
| Jharkhand        |  177 |  1466.67 |  21.45 |   3 |
| Karnataka        |   52 |   137.45 |   0.66 |   1 |
| Kerala           |  135 |   162.03 |   0    |   0 |
| Madhya Pradesh   |   62 |   141.49 |   8.76 |   3 |
| Maharashtra      |  765 |  3889.73 | 171.32 |  23 |
| Nagaland         |    8 |    16.78 |   0    |   0 |
| Odisha           |  290 |  1389.93 |  15.97 |   1 |
| Punjab           |  160 |   515.83 |  32.59 |  10 |
| Rajasthan        |  410 |  4266.17 | 167.25 |  63 |
| Tamil Nadu       |  632 |  1877.24 |  44.02 |  41 |
| Telangana        |  137 |   267.18 |  17.43 |  12 |
| Tripura          |   12 |    51.78 |   0    |   0 |
| Uttar Pradesh    |  193 |  2324.62 |  12.11 |  53 |
| Uttarakhand      |    2 |    31.82 |   0    |   0 |
| West Bengal      |  207 |  2039.18 | 135.47 |  13 |
| Total            | 5070 | 27426.2  | 922.58 | 331 |

(b),  (c)  and  (d):  Based  on  the  recommendations  of  GST  Council,  sub-rule  (4A)  has  been inserted in rule 8 of CGST Rules, 2017 to provide for risk based biometric-based Aadhaar authentication  of  registration  applicants  and  project  is  being  undertaken  on  a  trial  basis  in three States/UTs.

Further,  Goods  and  Services  Network  (GSTN)  has  made  active  the  functionality  of geocoding the address of the principal place of business of the registrants.

(e) :

| Tax Administration   |   No. of bogus entities identified (from 16.05.2023 to 09.07.2023) |   Detection (Rs. In Crore) |   Recovery/ Realization (Rs. In Crore) |   Arrests made |
|----------------------|--------------------------------------------------------------------|----------------------------|----------------------------------------|----------------|
| Centre (CBIC)        |                                                               9369 |                      10902 |                                     45 |              7 |

(f)  Details  of  the  measures  taken  by  the  Government  to  verify  the  identity  of individual's connected to businesses suspected of fraudulent activity are as under:

1. Amendment in rule 8 of CGST Rules, 2017 to provide for One time Password (OTP) based verification  of  Permanent  Account  Number (PAN) on the  mobile and email address linked with PAN. Further, insertion of sub-rule (4A) in the said rule 8 to  provide  for  risk  based,  biometric-based  Aadhaar  authentication  of  registration applicants;
2. Amendment  in  rule  9 of CGST  Rules,  2017  to  provide for physical verification in high risk cases, even when Aadhaar has been authenticated;
3. Using  robust  data  analytics  and  artificial  intelligence  to  identify  and  track risky taxpayers and detect tax evasion;
4. Carrying  out  special  all  India  drive  to  weed  out  fake  registrations  from 16.05.2023 to 15.07.2023;
5. Sharing  of  data  with  partner  law  enforcement  agencies  for  more  targeted interventions; and
6. 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.

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