GSTN to get info from Financial Intelligence Unit about suspicious forex transaction by GST assessee

As a way to curb misuse of GST registration for cash laundering, the federal government has included GST Community (GSTN) within the listing of entities for sharing of knowledge by Monetary Intelligence Unit (FIU) beneath Prevention of Cash Laundering Act (PMLA).

GSTN is twenty sixth company within the listing, as ready by the Finance Ministry. Different businesses embrace Directorate of Enforcement (ED), Cupboard Secretariat (Analysis and Evaluation Wing); Reserve Financial institution of India, Securities and Change Board of India, Insurance coverage Regulatory and Growth Authority of India, Nationwide Investigating Company, Severe Fraud Investigation Workplace and Director Common of Overseas Commerce amongst others.

A notification by the Finance Ministry, dated July 7, mentioned GSTN has been included “within the public curiosity.” This transfer has been initiated beneath part 66 of PMLA which prescribes sharing of knowledge by officers answerable for enforcement of the act, in case of case of suspicion of contravention of every other regulation. Info can be shared with the company answerable for implementation of different legal guidelines. In different phrases, if FIU or ED finds a GST assessee concerned in suspicious transaction in overseas exchanges, then data could be shared with GSTN for motion.

Curbing faux invoicing

Commenting on the newest transfer, S Vasudevan, government associate with Lakshmikumaran and Sridharan says, “The addition of GSTN will enable seamless circulate of knowledge from the ED to the GST authorities which can be utilized by them for initiating vital proceedings beneath the GST regulation,” he mentioned.

Equally, Smita Singh, Accomplice with S&A Regulation Places of work says this modification is a step in direction of tightening the noose in GST faux invoicing circumstances, which is on an increase exponentially. Now the intelligence-based data already out there with the Director, FIU, may also be shared parallelly with GSTN beneath the PMLA. It’s a recognized proven fact that faux invoicing is getting used for cash laundering utilizing shell firms. Thus, now real-time knowledge and investigation data can be shared in circumstances dealt with beneath the PMLA to make sure that a coordinated motion is taken towards offenders and tax evaders.

“This data can be utilized by GST authorities to provoke motion and goal financial offences associated to faux invoicing and fraudulent dealings utilizing non-existent firms beneath the GST Act,” she mentioned.

This transfer has been initiated at a time when two drives are being taken to weed out corporations together with shell firms, allegedly concerned in use of pretend invoices. Central GST Authority has tracked faux invoices amounting to ₹63,000 crore in three years beginning August 2020. Nevertheless, it has managed to gather solely about ₹3,000 crore.

In the meantime, the two-month joint particular drive by the Centre and State GST authorities, beginning Might 16, chosen over 69,600 GST Identification Numbers (GSTINs) for bodily verification by area tax officers. Of this, over 59,000 GSTINs have been verified and 16,989 have been discovered to be non-existent. Out of the 69,600 GSTINs, over 11,000 GSTINs have been suspended and 4,972 registrations have been cancelled. This concerned tax evasion of over ₹15,000 crore, blocking of enter tax credit score (ITC) was ₹1,506 crore and recovered taxes price ₹87 crore.