The directorate general of GST intelligence (DGGSTI) has come across huge mismatches in the turnover mentioned by businesses in income tax returns as compared to that in the GST returns. The sleuths have identified sectors where the evasion is taking place. In Nagpur zone alone, as much as 25 large business entities spread across seven sectors are under scanner. Sources say if the directorates in the entire country are taken into account, the figure can easily go into 10,000 assessees. Investigations have revealed that on account of lack of system to crosscheck details, assesses are easily tweaking their GST returns but providing factual details to the income tax authorities.
Cases have been found where on one hand actual figures are reported in the balance sheet filed with the registrar of companies (RoC) on which income tax returns are based, but much less is disclosed in the GST returns. This could not be possible in the earlier regimes of central excise and service tax when annual returns had to be filed along with the balance sheets. As only details of sales and purchases have to be filed in the GST returns, it is easy to manipulate the details. The department, which is already probing mismatch within the GST returns, is now also matching the data with income tax records, said sources. The GST1 return is an account of sales and GSTR3B is a summary of sales and purchases. There has been instances where firms have inflated the purchases in GSTR3B to bring down the tax liability. However, if the balance sheet filed with the RoC is seen the actual turnover can be found to be much more. Since there is no direct access to the income tax returns, the DGGSTI officials are downloading individual balance sheets from the RoC website and then approaching the income tax department to access the returns. A cumbersome process though, it has helped in unearthing major evasions, said sources. In Nagpur, it was found that a real estate company had disclosed four-time lower turnover in the GST returns as compared to the income tax returns. Now, the process of recovery is underway.
In an independent case, it was found that a firm in the city, selling cameras and other equipment apart from providing photography services, had been accepting fees in cash for the latter. Though even photography services come under GST. Recently, the DGGSTI had conducted a raid and unearthed sizeable suppression of turnover. The case will be forwarded to income tax department too. Restaurants selling food through online portals under scanner the DGGSTI has found that some of the restaurants selling food through online portals too have been evading tax for the sales done through this mode. One of the portals has developed a software that provides bills to the food joints without GST component. Restaurants using this mode are not reporting their sales at all to avoid GST liability. It was found that one of the joints that had withdrawn is registration and officially shut down the business but was actually operating by selling food from the backdoor through these portals. No GST was paid on such deals.