Latest GST Evasion News – March 10, 2025
1. Gujarat Detects Over 17,000 GST Evasion Cases
- More than ₹2,043.59 crore worth of GST evasion detected in the last two years.
- 15 people arrested under the GST Act; prosecution cases filed.
- Government canceled GST registrations of involved traders.
- Measures like bank account seizures and blocking input tax credits are being used for recovery.
2. Pollachi Jeweller Arrested for ₹6.53 Crore GST Evasion
- A jewellery firm partner in Pollachi, Tamil Nadu, was arrested for tax evasion.
- The company used dual accounting software to hide sales and avoid GST.
- Authorities found 305 kg of unaccounted gold sales and undeclared stock.
- The accused was remanded in judicial custody until March 10.
3. Supreme Court Stays GST Notices Against Online Gaming Firms
- Relief for companies like Delta Corp and Nazara Technologies as GST notices are put on hold.
- ₹1.12 trillion worth of GST show-cause notices issued to online gaming firms in 2022-23 and early 2023-24.
- The next court hearing is scheduled for March 2025.
4. Finance Bill 2025 Proposes “Track and Trace” Mechanism
- New system to monitor specific goods throughout the supply chain to reduce GST evasion.
- Unique Identification Marking (UIM) will be used for tracking.
- Initial focus on highly taxed products like cigarettes and pan masala.
5. Reduction in Pre-Deposit for GST Appeals
- Proposed amendment in Finance Bill 2025 aims to reduce financial burden on businesses.
- Pre-deposit requirement for appeals related to penalties only (without tax demand) reduced from 25% to 10%.
These updates indicate the government’s continuous efforts to strengthen GST compliance and reduce tax evasion.
Extra Reference :
What is GST Evasion ?
What is GST Evasion?
GST evasion refers to the act of intentionally avoiding payment of Goods and Services Tax (GST) by businesses or individuals. This is done through various fraudulent practices to reduce tax liability or completely evade tax payments.
Common Methods of GST Evasion:
- Fake Invoices – Issuing invoices without actual supply of goods/services to claim fake Input Tax Credit (ITC).
- Underreporting Sales – Declaring lower revenue to pay less GST.
- Non-Registration Under GST – Businesses operating without GST registration despite exceeding the turnover limit.
- Claiming False ITC – Availing Input Tax Credit without actually paying GST on purchases.
- Multiple GSTINs for Same Business – Creating multiple registrations to split sales and avoid higher tax slabs.
- Misclassification of Goods/Services – Declaring high-tax products as low-tax items to reduce GST rates.
- Cash Transactions to Avoid Tax – Conducting business in cash and not reporting transactions.
- Circular Trading – Creating fake sales between multiple entities to fraudulently claim ITC.
Penalties for GST Evasion:
- Tax and Interest Recovery – The evaded tax must be paid along with interest.
- Monetary Penalties – Can range from 10% of tax due (minimum ₹10,000) to 100% in fraud cases.
- Imprisonment – Serious offenses (e.g., evasion over ₹5 crore) can lead to jail terms up to 5 years.
- Business Closure – The government can cancel the GST registration of repeated offenders.
How GST Authorities Detect Evasion?
- GST Audits & Raids – Surprise inspections to check records.
- E-Way Bill Tracking – Monitoring transportation of goods.
- Data Analytics & AI – Government uses digital tools to detect suspicious transactions.
- Invoice Matching – Comparing supplier and buyer invoices to identify discrepancies.
Key Point :
GST evasion not only affects government revenue but also disrupts fair business competition. Strict monitoring, digital tracking, and penalties aim to curb tax fraud and promote transparency in the taxation system.
Call to Readers : Comment about your GST related experience that whether you like ” implementation ” of GST or not !!?
Is GST Implementation Going in the Right Direction or Too Strict?
The implementation of GST in India has had both positive impacts and serious challenges. While it has streamlined taxation, the harsh tax collection measures and inconsistent support from GST help centers have made compliance difficult for many businesses.
Positive Aspects of GST Implementation:
✔ Simplified Tax Structure – Replaced multiple indirect taxes with a single tax system, reducing complexity.
✔ Increased Transparency – Digital invoicing, E-Way bills, and invoice matching help curb tax evasion.
✔ Wider Tax Base – More businesses have been brought under the tax net, increasing government revenue.
✔ Ease of Doing Business – Businesses can now operate seamlessly across states without multiple tax barriers.
Strict Compliance Issues & Challenges:
⚠ Harsh GST Tax Collection – The government is still very strict when collecting GST, often putting excessive pressure on businesses.
⚠ Inconsistent GST Help Centers – Some help centers are useful, but others fail to provide proper guidance, leaving businesses confused.
⚠ More Benefits for Lawyers & Large Businesses – Lawyers and big business owners often benefit more from GST due to better knowledge and resources, while smaller businesses struggle.
⚠ More Business Closures Due to GST – Many small businesses shut down because they cannot handle the high compliance costs and tax burden.
⚠ Frequent Rule Changes – Constant updates make compliance difficult for businesses.
⚠ Delayed Refunds – Exporters and businesses claiming Input Tax Credit (ITC) often face delays in getting refunds.
Is GST Too Strict?
- For large businesses – GST compliance is manageable due to better resources and systems.
- For small businesses – Harsh tax collection, inconsistent help centers, and high compliance costs make GST feel too rigid.
- For tax evaders – The strict measures are necessary to curb fraud and prevent revenue loss.
Conclusion:
GST is moving in the right direction in terms of transparency and tax collection, but the government’s approach is too harsh on businesses. The unequal benefits for lawyers and large companies, along with inconsistent help centers, make GST more burdensome for small businesses. The government needs to simplify compliance and provide better support to ensure fair taxation without forcing businesses to shut down.
Final Words :
I think GST implementation is too harsh that it causes GST evasion.
GST Implementation Is Too Harsh, Leading to Business Closures and Tax Evasion
The introduction of GST in India was aimed at simplifying the tax system and increasing transparency. However, harsh implementation, complex compliance requirements, and aggressive tax collection have placed a heavy burden on businesses, especially small and medium enterprises (SMEs). This has led to a significant number of business closures and, in many cases, increased GST evasion as businesses struggle to cope with the system.
Rising Business Closures Due to GST
- Over 2.3 lakh small businesses across India have shut down since the introduction of GST, mainly due to compliance difficulties and high tax burdens.
- In Gujarat alone, more than 4.05 lakh businesses have closed since GST was rolled out, as many small enterprises found it difficult to sustain operations under the new tax regime.
- The informal sector has shrunk, with employment declining by around 1.6 million workers, as smaller businesses either shut down or moved to unregistered, cash-based operations to avoid GST complications.
Why Businesses Are Struggling Under GST?
- Complicated Compliance Rules – Frequent changes in tax slabs, multiple GST rates, and strict reporting requirements make compliance confusing and costly for small businesses.
- Harsh Tax Collection Practices – Authorities are aggressive in penalizing even minor errors, creating fear among business owners.
- Delayed Refunds & ITC Issues – Many businesses face long delays in getting GST refunds, affecting cash flow and forcing some to shut down.
- GST Help Centers Are Inconsistent – Government help centers sometimes provide support but are often unreliable or unhelpful, leaving businesses struggling to comply.
- Lawyers & Big Businesses Benefit More – Large firms and tax professionals find ways to navigate GST, while smaller businesses lack the resources to handle complex tax filings, giving an unfair advantage to bigger players.
How Strict GST Laws Are Causing More Evasion
Instead of improving tax collection, the strict and complicated nature of GST has led many businesses to find loopholes or evade taxes:
- Some businesses underreport sales or conduct cash transactions to avoid GST.
- Many firms create fake invoices to claim fraudulent Input Tax Credit (ITC).
- Small businesses shut down their formal operations and move to the unregistered sector to avoid compliance hassles.
Key Point :
While GST was intended to improve tax collection, its harsh enforcement and complex compliance system are forcing many businesses to shut down or find ways to evade taxes. The government must simplify GST, reduce penalties for small errors, and ensure better support for businesses to prevent further closures and encourage honest tax compliance.