Goods & Service Tax

Introduction: India’s Unprecedented GST Revenue Milestone Greetings, financial enthusiasts! CA Bhuvnesh Kumar Goyal here, a practicing Chartered Accountant and a fellow member of the Institute of Chartered Accountants of India. Today, I bring you exciting news on India’s record-breaking GST revenue. In April 2023, India achieved its highest ever GST revenue of over Rs 1,87,000 crore.  The Prime Minister, Shri Narendra Modi has called GST revenue collection for April 2023 being highest ever at ₹1.87 lakh crore a “great news for the Indian economy.”Replying to a Finance Ministry tweet, the Prime Minister tweeted : “Great news for the Indian economy! Rising tax collection despite lower tax rates shows the success of how GST has increased integration and compliance.” The gross GST revenue collected in the month of April, 2023 is ₹ 1,87,035 crore of which CGST is ₹38,440 crore, SGST is ₹47,412 crore, IGST is ₹89,158 crore (including ₹34,972 crore collected on import of goods) and cess is ₹12,025 crore (including ₹901 crore collected on import of goods) The Finance Ministry said, the revenues for the month of April 2023 are 12 per cent higher than the GST revenues in the same month last year. It said, for the first time gross GST collection has crossed Rs one lakh 75 thousand crore mark.During the month, the revenues from domestic transactions are 16 per cent higher than the revenues from these sources during the same month last year. Total number of e-way bills generated in the month of March 2023 was 9.0 crore, which is 11% higher than 8.1 crore e-way bills generated in the month of February 2023. Month of April 2023 saw the highest ever tax collection on a single day on 20th April 2023. On 20th April 2023, ₹ 68,228 crore was paid through 9. 8 lakh transactions. The highest single day payment last year (on the same date) was₹ 57,846 crore through 9.6 lakh transactions. This remarkable accomplishment has left many people wondering what’s behind this surge and how it will impact the nation’s economy.  So, let’s dive into the details and explore the factors that contributed to this monumental revenue collection. A Breakdown of the Highest ever GST Revenue of over Rs 1,87,000 Crore Collected in April 2023 The Driving Forces Behind the Surge Economic Recovery: India’s economy has been recovering at a swift pace, leading to increased production and consumption. This economic rebound has significantly contributed to the record-breaking GST revenue. Compliance Improvement: The government’s efforts to enhance tax compliance have paid off. Measures like e-invoicing, the introduction of QR codes, and the use of data analytics have helped reduce tax evasion and boost revenue collections. Digitalisation: The rapid digital transformation of businesses and the tax system has made it easier to file returns and pay taxes. This has resulted in improved compliance and increased revenue collection. Sectoral Growth: Several key sectors, including automobiles, FMCG, and pharmaceuticals, have witnessed robust growth, further driving GST revenue. Implications of the Record-Breaking GST Collection Reduced Fiscal Deficit: With the highest ever GST revenue of over Rs 1,87,000 crore collected in April 2023, the government’s fiscal deficit is likely to narrow, providing more room for growth-oriented policies and infrastructure investments. Increased Government Spending: The surge in revenue collection could potentially lead to increased government spending on social welfare schemes, infrastructure development, and job creation. Positive Impact on GDP: The record GST collection indicates a strong economic rebound, which could translate into higher GDP growth in the coming quarters. Improved Credit Rating: A better fiscal position may result in an improved credit rating for India, making it more attractive to foreign investors. Frequently Asked Questions (FAQs) What is the significance of the highest ever GST revenue of over Rs 1,87,000 crore collected in April 2023? This milestone indicates a robust economic recovery, improved compliance, and an overall healthier fiscal position for the government. How will this record-breaking GST collection impact the Indian economy? It could lead to reduced fiscal deficits, increased government spending, higher GDP growth, and an improved credit rating for India. What measures have been taken by the government to improve tax compliance? The government has implemented e-invoicing, introduced QR codes, and utilized data analytics to reduce tax evasion and improve compliance. Role of arrests, tax terrorism and enforcement ? We have seen many arrests under GST and heard of many cases of harassment where taxpayers were taken into study as per section 69 and section 132 of CGST Act. Further, there is no doubt about the misuse of powers of the authority in many cases of arrest and search which are contravention of Article 19 and 21. Taxpayers have been denied their right to life, dignity, liberty and respect. Further, in some cases innocent taxpayers and professionals are treated at par of serious proven criminals such as murderers and rapists by tax authorities and enforcement agencies. These actions certainly have some role to play in higher GST tax collection but the majority of it can be attributed to inflation. As the inflation rises, cost of production increases which leads to increase in the increased taxable value. As the taxable value increase, GST automatically gets increased but in real terms if we adjust it with inflation, then it might show entirely another picture. Conclusion: A Promising Outlook for India’s Economy The highest ever GST revenue of over Rs 1,87,000 crore collected in April 2023 signifies a robust economic recovery and a bright future for India. This impressive milestone, driven by compliance improvement, digitalisation, and sectoral growth, will likely have positive implications for the country’s fiscal health, GDP growth, and investment prospects. As we move forward, it’s essential to keep an eye on the government’s efforts to sustain this momentum and ensure that the benefits of this revenue surge trickle down to all sectors of the economy. As a fellow member of the Institute of Chartered Accountants of India, I am optimistic about India’s financial future. The record-breaking GST revenue is just one indicator of the nation’s potential to achieve greater heights. It’s crucial that we continue to monitor the

[To be published in the Gazette of India, Extraordinary,Part II,Section 3, Sub-section (ii)] Government of India Ministry of Finance (Department of Revenue) Central Board of Indirect Taxes and Customs Notification No 92/2020-Central Tax New Delhi, the 22nd December, 2020 S.O. …… (E).— In exercise of the powers conferred by sub-section (2) of section 1 of the Finance Act, 2020 (12 of 2020) (hereinafter referred to as the said Act), the Central Government hereby appoints the 1st day of January, 2021, as the date on which the provisions of sections 119, 120, 121, 122, 123, 124, 126, 127 and 131 of the said Act shall come into force. [F.No. CBEC-20/06/04/2020-GST] (Pramod Kumar) Director, Government of India   

Introduction Let’s face it, the moment a new tax system is introduced, there’s always a group of cunning individuals plotting to dodge it. In India, the Goods and Services Tax (GST) system is no exception. From counterfeit invoices to fabricated input tax credits, the modus operandi of GST evasion in India is as diverse as it is intriguing. So, buckle up and join us as we delve into the murky realm of fake invoices, fake input under GST, arrest provisions, and the strategies employed to outsmart the taxman in India. The Art of Deception: Fake Invoices and Fake Input A Slippery Slope: Understanding Fake Invoices When it comes to GST evasion, fake invoices are the bread and butter of fraudsters. These counterfeit documents are used to claim input tax credits (ITC) illegitimately, dodge taxes, and mask the real transaction trail. Here’s the lowdown on the types of fake invoices commonly used: Bogus billing: The creation of phony invoices for nonexistent goods or services, solely to claim ITC. Round-tripping: The act of moving goods between shell companies, using fake invoices to inflate turnover and claim ITC. Over-invoicing: Inflating the value of goods or services on the invoice to claim higher ITC. The Devil’s in the Details: Fake Input Tax Credits With counterfeit invoices in hand, fraudsters can exploit the GST system by claiming fake input tax credits. This illicit practice undermines government revenue and creates an uneven playing field for honest businesses. Phantom businesses: Fraudsters create fake companies that “sell” goods or services to one another. In reality, no transactions take place, and the sole purpose is to claim ITC. Pass-through entities: Real businesses act as intermediaries for fake transactions, taking a cut for their participation in the scheme. Punishment under section 132 of CGST Act (1) 1[Whoever commits, or causes to commit and retain the benefits arising out of, any of the following offences], namely:- (a) supplies any goods or services or both without issue of any invoice, in violation of the provisions of this Act or the rules made thereunder, with the intention to evade tax; (b) issues any invoice or bill without supply of goods or services or both in violation of the provisions of this Act, or the rules made thereunder leading to wrongful availment or utilisation of input tax credit or refund of tax; (c) 2[avails input tax credit using the invoice or bill referred to in clause (b) or fraudulently avails input tax credit without any invoice or bill;] (d) collects any amount as tax but fails to pay the same to the Government beyond a period of three months from the date on which such payment becomes due; (e) evades tax 3[****]or fraudulently obtains refund and where such offence is not covered under clauses (a) to (d); (f) falsifies or substitutes financial records or produces fake accounts or documents or furnishes any false information with an intention to evade payment of tax due under this Act; (g) obstructs or prevents any officer in the discharge of his duties under this Act; (h) acquires possession of, or in any way concerns himself in transporting, removing, depositing, keeping, concealing, supplying, or purchasing or in any other manner deals with, any goods which he knows or has reasons to believe are liable to confiscation under this Act or the rules made thereunder; (i) receives or is in any way concerned with the supply of, or in any other manner deals with any supply of services which he knows or has reasons to believe are in contravention of any provisions of this Act or the rules made thereunder; (j) tampers with or destroys any material evidence or documents; (k) fails to supply any information which he is required to supply under this Act or the rules made thereunder or (unless with a reasonable belief, the burden of proving which shall be upon him, that the information supplied by him is true) supplies false information; or (l) attempts to commit, or abets the commission of any of the offences mentioned in clauses (a) to (k) of this section, shall be punishable- (i) in cases where the amount of tax evaded or the amount of input tax credit wrongly availed or utilised or the amount of refund wrongly taken exceeds five hundred lakh rupees, with imprisonment for a term which may extend to five years and with fine; (ii) in cases where the amount of tax evaded or the amount of input tax credit wrongly availed or utilised or the amount of refund wrongly taken exceeds two hundred lakh rupees but does not exceed five hundred lakh rupees, with imprisonment for a term which may extend to three years and with fine; (iii) in the case of any other offence where the amount of tax evaded or the amount of input tax credit wrongly availed or utilised or the amount of refund wrongly taken exceeds one hundred lakh rupees but does not exceed two hundred lakh rupees, with imprisonment for a term which may extend to one year and with fine; (iv) in cases where he commits or abets the commission of an offence specified in clause (f) or clause (g) or clause (j), he shall be punishable with imprisonment for a term which may extend to six months or with fine or with both. (2) Where any person convicted of an offence under this section is again convicted of an offence under this section, then, he shall be punishable for the second and for every subsequent offence with imprisonment for a term which may extend to five years and with fine. (3) The imprisonment referred to in clauses (i), (ii) and (iii) of sub-section (1) and sub-section (2) shall, in the absence of special and adequate reasons to the contrary to be recorded in the judgment of the Court, be for a term not less than six months. (4) Notwithstanding anything contained in the Code of Criminal Procedure, 1973, all offences under this Act, except the offences referred to in sub-section

Finance Minister Nirmala Sitharaman on Saturday directed Central Board of Indirect Taxes & Customs to introduce its automated GST return scrutiny by next week and to implement an action plan to increase the taxpayer base through enhanced use of technology. The Goods and Services Tax (GST) is a tax that is levied on the supply of goods and services in India. It has been implemented to simplify the indirect tax system and to increase tax compliance. The Central Board of Indirect Taxes and Customs (CBIC) and the GST Department have been working together to monitor tax evasion and ensure that taxpayers are paying the correct amount of GST. To do this, they have introduced a new system of automated GST return scrutiny. In this blog, we’ll delve into the details of the automated GST return scrutiny by CBIC and GST Department, including what it is, how it works, and what it means for taxpayers. We’ll also answer some frequently asked questions (FAQs) about the new system to help you understand it better. Updates: 11/05/2023: CBIC rolls out Automated Return Scrutiny Module for GST returns in ACES-GST backend application for Central Tax Officers. CBIC has rolled out the Automated Return Scrutiny Module for GST returns in the ACES-GST backend application for Central Tax Officers this week.  This module will enable the officers to carry out scrutiny of GST returns of Centre Administered Taxpayers selected on the basis of data analytics and risks identified by the System. In the module, discrepancies on account of risks associated with a return are displayed to the tax officers. Tax officers are provided with a workflow for interacting with the taxpayers through the GSTN Common Portal for communication of discrepancies noticed under FORM ASMT-10, receipt of taxpayer’s reply in FORM ASMT-11 and subsequent action in form of either issuance of an order of acceptance of reply in FORM ASMT-12 or issuance of show cause notice or initiation of audit / investigation. Implementation of this Automated Return Scrutiny Module has commenced with the scrutiny of GST returns for FY 2019-20, and the requisite data for the purpose has already been made available on the officers’ dashboard. What is Automated GST Return Scrutiny by CBIC and GST Department? The automated GST return scrutiny by CBIC and GST Department is a new system that will help to monitor tax evasion and ensure that taxpayers are paying the correct amount of GST. The system uses advanced algorithms and data analytics to analyze GST returns and identify any discrepancies or errors. If any errors or discrepancies are found, the system will flag the return for further review by the CBIC and GST Department. How Does the Automated GST Return Scrutiny Work? The automated GST return scrutiny system works by analyzing GST returns and comparing them with other data sources such as bank statements, invoices, and other financial records. The system uses advanced algorithms to identify any inconsistencies or errors in the data. If any discrepancies are found, the system will flag the return for further review by the CBIC and GST Department. What Does the Automated GST Return Scrutiny Mean for Taxpayers? The automated GST return scrutiny by CBIC and GST Department means that taxpayers will need to be extra diligent in ensuring that their GST returns are accurate and complete. If any errors or discrepancies are found, the CBIC and GST Department may take action against the taxpayer, including fines or penalties. However, the new system also offers taxpayers the opportunity to rectify any errors or discrepancies before they are flagged by the system. This can help to avoid any fines or penalties and ensure that taxpayers are paying the correct amount of GST. FAQs on Automated GST Return Scrutiny by CBIC and GST Department What is the purpose of the automated GST return scrutiny by CBIC and GST Department? The purpose of the automated GST return scrutiny by CBIC and GST Department is to monitor tax evasion and ensure that taxpayers are paying the correct amount of GST. How will the automated GST return scrutiny system identify errors or discrepancies in GST returns? The system will use advanced algorithms and data analytics to analyze GST returns and compare them with other data sources such as bank statements, invoices, and other financial records. If any inconsistencies or errors are found, the system will flag the return for further review. Can taxpayers rectify errors or discrepancies before they are flagged by the system? Yes, taxpayers can rectify errors or discrepancies before they are flagged by the system. This can help to avoid any fines or penalties and ensure that taxpayers are paying the correct amount of GST. What happens if errors or discrepancies are found in a taxpayer’s GST return? If errors or discrepancies are found in a taxpayer’s GST return, the CBIC and GST Department may take action against the taxpayer, including fines or penalties. The taxpayer may also be required to provide additional information or documentation to explain the discrepancy. Is the automated GST return scrutiny system mandatory for all taxpayers? Yes, the automated GST return scrutiny system is mandatory for all taxpayers who are required to file GST returns. How often will the automated GST return scrutiny system be run? The frequency of the automated GST return scrutiny system is not specified by the CBIC or GST Department. It is expected to be run regularly to ensure that taxpayers are paying the correct amount of GST. Conclusion The automated GST return scrutiny by CBIC and GST Department is a new system designed to monitor tax evasion and ensure that taxpayers are paying the correct amount of GST. Taxpayers will need to be extra diligent in ensuring that their GST returns are accurate and complete to avoid any fines or penalties. The new system also offers taxpayers the opportunity to rectify any errors or discrepancies before they are flagged by the system. If you have any questions or concerns about the automated GST return scrutiny system, it is recommended

Finance Minister Nirmala Sitharaman has directed the Central Board of Indirect Taxes and Customs (CBIC) to implement an action plan to increase the taxpayer base through enhanced use of technology. Ms. Sitharaman said this while chairing a review meeting with CBIC in New Delhi today. She also directed CBIC to introduce its automated GST return scrutiny by next week. During the meeting, the Finance Minister was briefed on the final revenue achievement in total Indirect Tax collections for 2022-23. It stood at 13 lakh 82 thousand crore rupees, as against 12 lakh 89 thousand crore rupees in 2021-22. On the GST side, the average gross monthly collection for the year 2022-23 stood at one lakh 51 thousand crore rupees. The monthly GST revenue collections exceeded one lakh 40 thousand crore rupees for 12 months in a row. The comprehensive review covered a variety of work areas including trade facilitation, taxpayer services, grievance redressal of the trade, finalisation of disciplinary cases and infrastructure projects. Ms. Sitharaman emphasised the need for continuously improving taxpayer services. In order to intensify its drive against fake billing and Input Tax Credit, the Minister asked CBIC to undertake a comprehensive root cause analysis by studying the typology of cases already booked. She asked them to come up with recommendations on technology based solutions to address the menace and prevent its occurrence.

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