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The government has cancelled Goods and Services Tax (GST) registration of over 163,000 business entities due to non-filing of tax returns for more than six months to curb the menace of fly-by-night operators who create bogus firms and fraudulently avail input tax credit (ITC) worth thousands of crores, two officials said.

To handle the menace of fake firms and circular trading entities, GST officials have cancelled 1,63,042 registrations in the month of October and November this year due to non-filing of GSTR-3B returns for more than six months , the finance ministry officials said, requesting anonymity.

“All these business entities, who had not filed their GSTR-3B returns for more than six months, were first issued the cancellation notices and then their registrations were cancelled as per standard operating procedure,” one of the officials said. GSTR-3B is a summary statement of business transactions filed by a registered entity every month.

In Ahmedabad zone alone, 11,048 GST registrations have been cancelled. In Chennai zone, 19,586 suo motu cancellations have been done so far in respect of GST taxpayers who have failed to file returns for more than six months, he said.

“Further, 28,635 registered entities who have not filed their GSTR-3B returns for more than six months as December 1, 2020 have been identified and the tax authority has suo motu initiated cancellation process in these cases,” he added.

The tax authority has last month launched a massive crackdown against fake entities indulging in issuing bogus invoices to fraudulently usurp ITC. Within one month, the Directorate General of GST Intelligence (DGGI) and Central GST Commissionerates have so far arrested 132 persons, including four chartered accountant and a woman for availing or passing on ineligible ITC fraudulently and have booked 1,430 cases against more than 4,586 bogus entities, a second official said.

“The tax authority is also scanning newly registered entities that have not provided correct details at the time of registration. Out of 720 deemed registrations granted between August 21 and November 16 this year, where Aadhaar authentication was not done, 55 deemed registrations have been identified for discrepancy and the process of cancellation was initiated in these cases,” the first official said.