Central GST officers detected GST evasion of about Rs 1.51 lakh crore in the current fiscal, recovering Rs 18,541 crore by December 30, surpassing the internal target of 50,000 crore. The finance ministry, on Sunday, revealed that since mid-May 2023, they uncovered 29,273 firms involved in suspected input tax credit evasion of Rs 44,015 crore.
Officials from GST authorities issued demand notices of ₹1.45 lakh crore to approximately 1,500 businesses in December. These GST notices address discrepancies in annual returns and claims for input tax credits for the financial year 2018.
Surge in GST Notices Due to Deadline
The large number is attributed to the last date for serving notices for 2017-18, which was December 31, 2023. According to a senior official who preferred not to be identified, “There was a deadline factor.”
“The 1.45 lakh crore comprises penalty and interest,” mentioned the official. In 2017-18, a total of 7.25 million GST returns were filed, with only a small proportion selected for scrutiny due to short payment of taxes, the official added. For 2017-18 and 2018-19, a total of 48,000 GST returns were selected for scrutiny by December 30 after discrepancies were detected or flagged by the system, the official stated without providing a breakup for both years.
Department Eyes FY 2018-19 for GST Notices
As the time limit for 2017-18 has lapsed, officials state that the department has shifted its focus to 2018-19, anticipating a potential increase in the volume of notices in the coming days. “Of all returns for FY19 picked up for scrutiny, 8,000 are due for further scrutiny,” mentioned the official cited earlier.
The government has extended the deadline for issuing demand notices for discrepancies in returns for 2018-19 and 2019-20 to April 30, from the earlier March 31 deadline. Officials also highlight weak tax recovery in cases where evasion was detected as another reason for the widespread issuance of notices.
Challenges in GST Recovery
Central GST officers detected GST evasion of about Rs 1.51 lakh crore in the current fiscal, with recovery standing at Rs 18,541 crore as of December 30, falling short of the internal target of Rs 50,000 crore. The finance ministry highlighted that since mid-May 2023, they identified 29,273 bogus firms involved in suspected input tax credit evasion of Rs 44,015 crore.
This effort reportedly saved Rs 4,646 crore, blocking Rs 3,802 crore through input tax credit and recovering Rs 844 crore. Additionally, 121 arrests have been made in related cases. In the preceding fiscal year 2022-23, tax officials detected evasion of Rs 1.31 lakh crore, with a recovery of Rs 33,226 crore. Saurabh Agarwal, tax partner at EY, stated, “Notices for 2018-19 are currently being issued for the recovery of tax liabilities on both factual and interpretation issues.”