Physical verification of GST taxpayers to begin in Karnataka

Karnataka is all set to become the first state in the country to do physical verification of registered taxpayers under the Goods and Services Tax regime.

With this move, Karnataka may earn the dubious distinction of becoming the first state in the country to revive *‘Inspector Raj’* under the new tax regime.

Why it is proposed so?

Karnataka is considering initiating the physical verification of registered taxpayers under GST to contain tax evasion in sensitive commodities.

Some sectors include arecanut, cashew, rubber, electrical and electronic goods, auto parts, edible oil, readymade garments, timber, cement and construction material.

The entities that can face these checks include entities who have generated e-Way Bills without filing any returns. Furthermore, people who have generated an unusually high number of e-Way Bills compared to the average number of e-Way Bills generated during the previous periods and taxpayers with a gap between inward and outward supply in the e-Way Bills will be the targets of the state’s commercial taxes department.

The Karnataka tax department is also setting up a special IT cell to verify the credentials of the newly registered person by visiting his/her business premises to physically verify the documents that they have uploaded. They will also record the geo-coordinates of the business concern along with the details.

However, what is a little worrying is that this move of Karnataka may enthuse other states in the country to follow suit.

It may be considered as a pioneer for a new regime in the GST.

 This may result in the imposition of ‘Inspector Raj’ all over the country and will shake the very foundation on which GST has been implemented.

Let us wait and watch for a new show to begin.