common myths and facts of CGST
In order to curb fake invoicing and malpractices by taxpayers to evade tax or claim more Input Tax Credit on GST, the Central Board of Indirect Taxes and Customs had issued CGST (Fourteenth Amendment) Rules 2020, Notification No. 94/2020 dated 22.12.2020.
There have been numerous myths been circulated by people on social media which has led to confusion in the minds of genuine taxpayers. Therefore, CBIC has issued the Myths and Facts as follows:
Myth 1: No opportunity of being heard will be given if proper officer believes that registration is liable to be cancelled.
FACT 1: The GST laws passed by the Parliament and state legislatures provide that GST registration is liable to be cancelled for those who have not filed 6 or more returns. It is therefore wrong to say that the cancellation will be done without reasons. To protect the interest of revenue, this provision has been put in the law so that fraudsters do not run way with CGST collected from their customers. Immediate action for suspension is necessary in cases where unscrupulous operators seek to pass on huge fake credit by gaming the system. The genuine taxpayers will be still given an opportunity of being heard in such cases.
Myth 2: Even if there is a clerical error in filing returns, GSTIN will be cancelled. There is no option to correct your mistakes.
FACT 2: Only in fraudulent cases where there are significant discrepancies based on data analytics and sound risk parameters, and not mere clerical errors, the action of suspension and cancellation will be taken up. One such example of a fraudulent case and serious discrepancy is where one has passed on crores of rupees of Input Tax Credit and not filed GSTR-3B returns, nor has he filed Income Tax Returns or disclosed very little liability in Income Tax returns etc. Therefore, mere clerical error in filing returns will not lead to cancellation of GSTIN.
Myth 3: The proposed change will impact ease of doing business.
FACT 3: Fraudsters are misusing the system to the detriment of the interest of genuine taxpayers. Consequently, data driven targeting of the fraudsters is the need of the hour. The data is being collected from Income Tax, Banks, Customs and necessary matching is being done to identify fraudsters and take action of suspension and cancellation after following due process of law. Precise targeting of fraudsters is being done only in specific cases, after doing a comprehensive analysis, using advanced data analytics tools, etc. Action against fraudsters will not impact the Ease of Doing Business which is achieved in GST through liberal registration, refund regime and self-compliance system with little or no manual checks.
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