At a recent national conference of the Indian indirect tax authority, senior finance ministry officials emphasized the crucial need for tax officers to maintain a delicate balance between ensuring compliance and fostering a favorable business environment within the country. This message was delivered at the second edition of the ‘National Conference of Enforcement Chiefs of State and Central GST Formations’ held in New Delhi on Tuesday.
Revenue Secretary Sanjay Malhotra, in an official statement, stressed the importance of achieving a “fine balance between enforcement actions and ease of doing business.” He urged central and state tax officers to prioritize the detection and elimination of fake registrations during a special drive that has been initiated. Malhotra emphasized the critical need to identify and pursue the masterminds and beneficiaries of fraudulent tax credits to ensure that appropriate and stringent action is taken against them.
Malhotra highlighted the potential of recent changes implemented in GST returns to systematically address the issue of GST evasion. He expressed confidence that these changes would provide a more robust framework for tackling tax fraud effectively.
Sanjay Agarwal, Chairman of the Central Board of Indirect Taxes and Customs (CBIC), echoed the importance of proactive enforcement measures to stay ahead of tax evaders and safeguard the integrity of the GST system. He advised enforcement units of the tax administration to prioritize genuine cases of evasion, focusing their efforts on addressing actual fraud rather than delving into interpretative issues or common industry practices.
The government has launched a two-month special drive, commencing on August 16th, aimed at eradicating fraudulent GST registrations employed by individuals and entities seeking to evade tax liabilities. This drive has already identified approximately 59,000 potential fake firms, which are currently undergoing verification and further investigation, according to the official statement.
The statement also revealed, citing the Director General of GST Intelligence, that tax evasion amounting to Rs. 1.2 trillion, linked to the improper utilization of tax credits, has been detected since 2020. This significant figure underscores the scale of the challenge faced by Indian tax authorities in their efforts to combat fraudulent activities.
The Indian tax administration has significantly leveraged technology and implemented stringent disclosure requirements in recent years, contributing to a notable increase in GST revenue collections. Recognizing the possibility of differing interpretations of legal provisions between tax officials and taxpayers, the CBIC has advised field officers to consult with higher authorities before issuing show cause notices in such situations. This measure is intended to ensure consistency and fairness in the application of tax regulations.
