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Govt plans Standard Operating Procedure to tackle unauthorized GST collection

The Government of India has recently taken note of the alarming issue of taxpayers whose GST registrations were canceled due to fraudulent practices. Despite the cancellation, these businesses continue to operate and collect taxes without any hindrance. In response to this concerning situation, the central government, in collaboration with state governments, is planning to introduce a Standard Operating Procedure (SoP) to effectively tackle cases of tax evasion and ensure compliance.

The Need for Stringent Action

It is a matter of great concern that despite the cancellation of their GST registrations, numerous fraudulent businesses persist in their operations and continue to collect GST from unsuspecting individuals. To address this issue, the government plans to announce the SoP during the upcoming national tax conference in November. The objective is to crack down on such entities and put an end to their illegal activities.

According to a top official, once the GST registration has been revoked, it becomes illegal for businesses to continue operations and collect taxes from consumers. However, many fraudulent businesses have been disregarding this, resulting in substantial revenue loss for the government.

The Nationwide Drive Against Fake Registrations

To combat the issue of fake GST registrations, the government conducted a nationwide drive from May 16 to July 15. The drive aimed to uncover fraudulent entities that were misusing the GST system for personal gains. As a result of this initiative, the Central GST officers were able to identify a staggering 9,369 fraudulent entities, leading to a detection of GST evasion amounting to Rs. 10,902 crore as of July 9.

During the drive, several individuals were arrested by the Central GST officers for their involvement in fraudulent activities. The finance ministry's update to the Lok Sabha reported a total of 7 arrests.

Cases of Misuse of PAN/Aadhaar Details

In addition to the drive against fake registrations, the Central GST officers also identified numerous cases of fraudulent GST registration between July 1, 2017, and June 30, 2023. These cases involved the misuse of PAN/Aadhaar details belonging to others. A total of 5,070 such cases were detected, resulting in a massive tax evasion amounting to Rs. 27,426 crore. The government was able to recover Rs. 922 crore from these cases, and a total of 331 individuals have been arrested in connection with these fraudulent activities.

The Role of the Standard Operating Procedure (SoP)

To combat the persistent issue of unauthorized GST collection, the government is set to introduce a comprehensive SoP during the national tax conference. This SoP will outline the necessary steps and measures to be taken against businesses that continue to operate and collect taxes despite the revocation of their GST registrations.

The primary objective of the SoP is to ensure compliance with the law and prevent tax evasion. It will provide a clear framework for authorities to deal with fraudulent entities and take stringent action against them. By establishing a standardized procedure, the government aims to put an end to the illegal activities of these businesses and safeguard the interests of consumers and the economy as a whole.

Collaboration Between Central and State GST Officers

To effectively implement the SoP and tackle unauthorized GST collection, the central government will collaborate closely with the state governments. This collaboration will ensure a coordinated approach in identifying and taking action against fraudulent businesses.

The joint efforts of central and state GST officers will enable better enforcement of the law and facilitate the sharing of information and resources. By working together, the government aims to create a robust system that leaves no room for fraudulent practices and ensures the smooth functioning of the GST regime.

Importance of Compliance and Consumer Protection

The introduction of the SoP highlights the government's commitment to promoting compliance and protecting the interests of consumers. By cracking down on unauthorized GST collection, the government aims to instill confidence in the taxation system and create a level playing field for honest businesses.

When businesses operate without proper registration, consumers are at risk of being cheated and exploited. Unauthorized GST collection not only hampers the government's revenue but also erodes trust in the system. Therefore, it is essential to take strict action against those who flout the law and ensure that consumers are protected from fraudulent practices.

Conclusion

The government's plan to introduce a Standard Operating Procedure (SoP) to tackle unauthorized GST collection is a significant step towards curbing tax evasion and ensuring compliance. By addressing the issue of businesses that continue to operate despite the revocation of their GST registrations, the government aims to protect consumers and safeguard the integrity of the taxation system. Through collaboration between central and state GST officers, the government is determined to take stringent action against fraudulent entities and create a transparent and fair business environment. Compliance with the law and consumer protection are key priorities, and the government's efforts in this regard are commendable.

 

author

The Tax Heaven

Mr.Vishwas Agarwal✍📊, a seasoned Chartered Accountant 📈💼 and the co-founder & CEO of THE TAX HEAVEN, brings 10 years of expertise in financial management and taxation. Specializing in ITR filing 📑🗃, GST returns 📈💼, and income tax advisory. He offers astute financial guidance and compliance solutions to individuals and businesses alike. Their passion for simplifying complex financial concepts into actionable insights empowers readers with valuable knowledge for informed decision-making. Through insightful blog content, he aims to demystify financial complexities, offering practical advice and tips to navigate the intricate world of finance and taxation.

Frequently Asked Questions

The government plans to implement a Standard Operating Procedure (SOP) to tackle unauthorized GST collection, aiming to curb instances where entities unlawfully collect GST from customers without being registered under the GST regime.

Unauthorized GST collection refers to the unlawful collection of Goods and Services Tax (GST) by entities that are not registered under the GST regime or not authorized to collect taxes. It is a concern as it leads to tax evasion, loss of revenue for the government, and exploitation of consumers.

The Standard Operating Procedure (SOP) will outline a systematic approach for identifying, reporting, and addressing instances of unauthorized GST collection. It will involve measures such as increased monitoring, reporting mechanisms, enforcement actions, and public awareness campaigns.

Stakeholders, including tax authorities, enforcement agencies, industry associations, consumer forums, and the general public, will play a crucial role in implementing the SOP by reporting suspicious activities, cooperating with authorities, and spreading awareness about lawful GST practices.

Entities found guilty of unauthorized GST collection may face penalties, fines, prosecution, cancellation of GST registration, and other enforcement actions as per the provisions of the GST law. Additionally, they may be required to refund the unlawfully collected GST to affected customers.

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