Tamil Nadu GST Dept. Issues Instruction To Identify Fake Billing Traders Applying For New GST Registration

When a registered person issues a Tax Invoice without actual supply of goods or services or payment of GST then such invoice is presumed to be 'Fake Invoice'. The person issuing the bill is a fake bill trader.

The registration procedure under the Goods and Services Tax Act has been streamlined to facilitate doing business by eliminating the need for pre-verification of firm premises. Many unscrupulous individuals have obtained several registrations in order to engage in bill trading operations, resulting in revenue losses to the state exchequer.

In Tamil Nadu, the department discovered 771 bill dealers with a total revenue loss of Rs. 1,648 crore, and their registrations were terminated, and action is being taken against the beneficiaries.

The state government has issued instructions in order to prevent potential bill dealers from filing for registration.

Rules 8 and 9 under the TNGST Act have been amended to include the Aadhaar Authentication procedure in new registration situations.

The proviso (b) to Rules 9 (1) and 9 (2) of the Tamil Nadu Goods and Services Tax Rules states, "provided that where the proper officer, with the approval of an officer authorised by the Commissioner not below the rank of Assistant Commissioner, deems it fit to carry out physical verification of places of business, the registration shall be granted within thirty days of application, after physical verification of the place of business in the presence of the said person, in the manner provided under rule 25 and verification of such documents as the proper officer may deem fit."

After obtaining registration, bill traders submit invoices for large sums of money with no provision of products or services in a short period of time. The Department learns about his bill trading operations only when he submits his return on the 20th day of the following month. The merchant has fled from the declared location or is non-existent even from the day of registration by the time the department learns about the bogus bill, leaving no trail for the department to pursue.

Again, the bill traders enter the system using a different identity and continue their bill trading activity. As a result, it is critical that the Department increase its assessment of new registration applications in order to detect bill traders at the entry level.

The state government has instructed that any application for new registration filed has to undergo the process of matching with the database. If any of the six parameters pertaining to cancelled registration are found to have been matched with details provided in the application for new registration, the jurisdictional proper officer will invariably conduct pre-verification of the business premises.

The six parameters include place of business, PAN, mobile number, e-mail ID, authorised signatory and bank account number.

Circular No: 10/2022

Dated June 07, 2022