34 bogus firms exposed in drive against GST fraud

Kochi: The enforcement wing of the state GST department recently uncovered 34 bogus companies operating in Ernakulam as part of a nationwide special drive that took place between Aug 15 and Oct 15.
Most of these fraudulent companies were involved in the scrap and plywood sectors. The operators typically rented a building or space, paying an advance to the owner. They then used the rental agreement to obtain GST registration.
With this GST number, they were able to acquire e-way bills and tax invoices for transporting goods valued over Rs 50,000.
According to regulations, businesses must pay taxes for the previous month by the 20th of the following month. "Once they secured their GST registration, these operators, often stopped paying rent, leading to eviction by the property owner. They would then continue their operations without paying GST or filing tax returns, frequently setting up new bogus companies under different names," said a GST official.
"These bogus firms do not pay taxes, forcing the department to initiate investigations. Once identified as fraudulent, we cancel their GST registration. We assess the tax amount based on the business conducted during their operation and issue a notice for payment. Often, they do not comply," said the official.
This illegal practice can only be prevented if GST registration is conducted by verifying the operator's Aadhaar information and requiring them to visit the GST office in person. The official said that there are instances where individuals have had registrations made in their name without their knowledge. In one case, a job candidate was misled by the operators of a bogus company, who used his Aadhaar and mobile OTP to register for GST.
The candidate was unaware of this and was told that the OTP was needed to set up a provident fund account linked to his new job. Trusting their instructions, he provided the OTP. He only came to know about the misuse of his Aadhaar when authorities contacted him, the official said.
During the special drive, GST officials identified a total of 48 bogus firms in central Kerala, including those in Ernakulam, Thrissur, Idukki, and Palakkad.