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Goods and services tax registrations for businesses could be suspended immediately if there is a mismatch in sales returns filed by the company and those filed by their suppliers.
The Central Board of Indirect Taxes and Customs (CBIC) has issued standard operating procedures (SOPs) for suspension of registration of taxpayers for discrepancies, which indicate breach of GST laws.
The set of new instructions to field officers is to ensure uniformity in the way registrations are suspended, but subsequently restored if the taxpayer answers the queries of officials satisfactorily.
The standard operating procedures also say officials must collect any tax dues before the registration is restored or cancel the registration if they find it breaches GST laws.
The legal provision for immediate suspension of goods and services tax registrations for anomalies in the tax returns was notified in December to safeguard the interest of the revenue department.
Suspension of registration will be carried out in cases where the continuation of the operation of the registration poses a threat to revenue leakage.
The government’s drive to enhance compliance of goods and services tax returns has led to improved tax collections over the past two months.
Goods and services tax collection crossed the ₹1-trillion mark for four consecutive months, touching an all-time high of about ₹1.2 trillion in January.
As part of the government’s drive against fake invoicing rackets, more than 2,500 cases have been registered against 8,000 entities since mid-November. Eight chartered accountants were among the 258 people arrested during the drive.
The central government has informed accounting rule maker and self-regulator Institute of Chartered Accountants of India (ICAI) to take action against its erring members.
Fake invoices are used to evade not only goods and services tax and income tax, but also to divert funds from companies. They are also used for showing non-existent transactions to jack up figures on books to obtain loans from banks.
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