2nd Drive Against Fake GST Registrations

In a decisive move to strengthen GST compliance, the Government of India has launched its Second Nationwide Drive Against Fake GST Registrations. The objective is to weed out fraudulent entities, increase genuine tax compliance, and safeguard revenue collection.

If you’re a business owner, accountant, or tax consultant, staying updated with this campaign is crucial. This article breaks down the 2nd GST crackdown, what it means for legitimate businesses, and how Cretum Advisory can help you stay on the right side of the law.

What is the 2nd Drive Against Fake GST Registrations?

In May 2023, the initial specific campaign against fraudulent GST registrations was initiated, revealing thousands of fraudulent companies that were producing fictitious invoices without conducting any real activity. These fake firms exploited the GST system to claim fraudulent Input Tax Credit (ITC).

After the success of the first phase, the Central Board of Indirect Taxes and Customs (CBIC) and State GST departments have jointly launched a second round of verification from May 2024, focusing on questionable GST registrations and increasing enforcement at the field level.

Key Objectives of the Drive

• Identify and cancel non-genuine GSTINs
• Verify physical existence of registered businesses
• Prevent ITC frauds via fake invoices
• Enhance trust in the GST ecosystem
• Monitor high-risk sectors like trading, construction, and scrap dealing

How Does the Verification Happen?

• Physical Verification: Field officers visit the business address provided at the time of registration.
• Document Checks: Examination of utility bills, rent agreements, and invoices.
• Technology Use: GSTN analytics and AI-based risk profiling for flagging suspicious registrations.

Red Flags That Can Trigger Scrutiny

• Mismatch in GSTR-3B and GSTR-1 filings
• Businesses with no physical presence
• Unusual spikes in ITC claims
• Transactions with blacklisted or deregistered suppliers
• Using multiple fake GSTINs under the same PAN

Impact on Genuine Businesses

While the drive mainly targets fraudulent firms, genuine taxpayers may face scrutiny if their compliance records are weak or documentation is incomplete.

Risks include:

• Temporary GSTIN suspension
• ITC mismatch issues
• Business disruptions due to blocked invoices
• Notices under GST Rule 21 and Rule 21A

That’s why it’s important for every business to maintain accurate GST records, ensure timely return filings, and be audit-ready.

Cretum Advisory Can Help You Stay GST-Compliant

At Cretum Advisory, we help businesses navigate every layer of GST compliance confidently. Whether you’re under scrutiny or want to prevent future issues, our expert team ensures your records are clean and your filings accurate.

Our GST Compliance Services Include:

1. GST Registration & Amendments

   Accurate and legally compliant registration support. We will also provide GST Advisory services to our clients.

2. Monthly & Annual Return Filing (GSTR-1, 3B, 9)

   Timely and accurate submissions to prevent ITC mismatches and fines.

3. Reconciliation of ITC with GSTR-2A/2B

   Maximize legitimate ITC and avoid fraud flags.

4. Physical Verification Advisory

   Prepare your records and premises for GST department checks.

5. GST Audit & Notice Handling

   End-to-end support in responding to GST audit notices and Rule 21 scrutiny.

6. Vendor Due Diligence

   Identify risky suppliers that could affect your GST credibility.

Proactive Steps to Avoid GST Trouble

Here are some practical tips for businesses to stay safe during the drive:

1. Update Business Address & Details

   Ensure your GST portal has the correct contact and location information.

2. Maintain Proof of Business Activity

   Keep utility bills, rental agreements, sales invoices, and purchase orders in order.

3. Regularly File Returns

   System flags are avoided by filing GSTR-1 and GSTR-3B on time.

4. Cross-Check Vendors

   Deal only with verified vendors who file their returns.

5. Respond Promptly to Notices

   Any GST portal notice must be addressed immediately to avoid cancellation.

The Final Thought

The 2nd drive against fake GST registrations is a strong step toward cleaning up the indirect tax system. While its focus is on fraudulent entities, every business must stay alert, organized, and compliant to avoid unintended consequences. 2ndCretum Advisory is here to help you with that.. From GST filings to audit support and documentation checks, we ensure your business is always ready for any scrutiny.

FAQs: 2nd Drive Against Fake GST Registrations

Q1. What is the 2nd drive against fake GST registrations?

It’s a nationwide campaign by CBIC and State GST departments to identify and cancel non-genuine GSTINs.

Q2. Why is the government cracking down again?

To stop fake invoicing, prevent ITC fraud, and boost compliance.

Q3. How is a fake GST registration identified?

Through physical verification, data analytics, and mismatched returns or suspicious ITC claims.

Q4. Who is most at risk during this drive?

Businesses with poor compliance, fake addresses, or unusually high ITC claims.

Q5. What happens if a registration is found fake?

The GSTIN can be suspended or cancelled under Rule 21 or Rule 21A.

Q6. How can businesses prepare for verification?

Update registration details, keep records ready, and ensure proper documentation.