Karnataka commercial taxes department has directed physical verification of registered taxpayers under goods and services tax (GST) to ascertain their credentials, potentially starting ‘inspector raj’ in the new tax regime. This directive could set a precedence and other states may follow Karnataka’s footsteps. This is being done to check tax evasion in sensitive commodities. Some of the sectors in focus include arecanut, cashew, rubber, auto parts, electrical goods, electronic goods, edible oil, readymade garments, timber, cement and construction material.
Those entities that have generated electronic way (e-way) bills despite being a non filer of returns could face such checks. Entities that have generated a large number of e-way bills compared to average e-way bills generated during previous periods and those with gap between inward and outward supply e-way bill should expect such a visit by a tax officer. “There is a need to verify the credentials of the newly registered person by visiting the business premises to verify the documents uploaded and to record the geo coordinates of the business concern along with other details,” the directive said. A special IT module has been developed for this.