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The pan-India drive against fake GST registration has created problems for ecommerce companies, which maintain virtual offices in various states with minimal staff and no books of accounts.

Talking to PTI, MakeMyTrip Group Vice President (Taxation) Tajinder Singh said that the GST officials should enquire with the head offices with regard to virtual offices before categorising the state registration as a fake entity for non-production of books of accounts.

“We maintain virtual offices in states …in this fake registration drive the field offices have mistaken these offices as fake registration, however, we were only using these offices for tax payment, and there was no ITC flow or fraud being committed using those registrations. Because of this, a lot of registration was blocked for compliance purposes, and that created problems for us,” Singh said.

Centre and state GST authorities have on May 16 launched a two-month drive to check fake registration under Goods and Services Tax (GST). The fake registrations are mainly taken to defraud the exchequer by wrongfully claiming Input Tax Credit (ITC).

In this drive, 45,000 fake registrations have been identified and evasion worth Rs 13,000 crore was detected. Also, the wrongful availment of ITC worth Rs 1,430 crore has been blocked.

Singh said that the field offices should take into account the fact that virtual offices are maintained with a few staff and often they do not attend the office every day. The virtual office with a place of address is created only to comply with state GST laws and is not meant to claim wrongful ITC.

“When field officers come to these virtual offices, they will not find the physical presence of employees and, in that sense, they would say nothing is there. After going back, they will send us emails, and we provide them the information. All the information is available, all the records are available. It may not be readily available when they approach the office,” Singh added.

The ecommerce companies have been representing to the GST authorities that they should be allowed to keep the head office address for registration in states to help them do away with the requirement of having a physical presence or maintaining a physical office.

On the issue faced by ecommerce companies, Central Board of Indirect Taxes (CBIC) Member GST Shashank Priya said one thing we have been advising is that wherever you have indicated as a virtual office, the line of distinction between a fake registrant and an ecommerce operator is very thin.

He said there should be some distinguishing feature by which virtual offices in states can say that this is genuine.

“You should be able to fetch your books of accounts. Sometimes when the officers go, the administration people say that the records are not with us, they are with the head office. So that creates suspicion.

“Since there is a requirement to have records kept at the place of registration, there should be an electronic means of fetching the records and showing it to them to satisfy that you are a legitimate registrant,” Priya said.