Use of Human Intelligence and Artificial Intelligence in GST Special Drive

This is a very welcome step by the government to take such initiatives to curb fake invoicing. It is necessary for the growth of an economy and country to ensure smooth flow of inflow of funds.

As per this initiative of curbing fake invoicing and fake firms, data coming out is from various IT sources such as GSTN, DGARM, BIFA, NIC, E-Way Analysis etc. which provides certain information to department for evaluating the data and taking actions accordingly.

However, it does not mean that the data provided by such portals/software confirm that the firms are fake firms only. Data provided by such sources are suspicious data only which needs to be verified and action is required thereafter only.

While there are many cases where actions are taken without verification merely based on such information.

IT/AI does not have brain to evaluate the data in real world. It only works as per certain instructions/coding done by a software company and may not be suitable for all working scenarios.

For example, a company might be indulged in fake invoicing and have stopped the business for last six months and disappeared suddenly and registration needs to be cancelled. 

There can also be scenario where registration has been taken, however, sale is not done for last six months as the company is at the stage of preparing infrastructure for business such as construction of building, import and installation of machinery, purchase of raw material/inventory etc. In both the cases, business has not been done for last six months.

Now, in both the cases, software/portal will give the same result that both the companies are not doing sale for last six months. However, the registration of company in first case needs to be cancelled while company in second case needs better working environment for the business.

If the registration of firm in second case is cancelled/suspended without any verification, that will never set good memories or good example of GST regime in the mind of any entrepreneur.

This is not a hypothetical scenario. One such case has recently happened, where one large manufacturing company applied for GST registration and spent approx. 6 months in building setup, preparing all necessary infrastructure, got machineries/storage system installed, placed orders, imported goods in crores. Sale started with well-known large companies in 7^th month. However, on 18^th May 2023, GST number was suspended for not starting business for last 6 months, e-way Bill stopped, E-Invoices also stopped. Goods were ready for dispatch, however, neither E-invoice could be generated nor E-way Bill. Supply was urgent as per agreement and hampered production of the recipient which resulted into delayed performance of contract and heavy penalty for non-timely supply of goods.

In such scenarios, suspension of GST number without verifying the data, without hearing the taxpayer/registered person  is nothing but harassment. 7 days’ time is given to reply before cancellation, however, suspension has already caused harassment with stopping the E-way Bill and E-invoice.

7 days’ period to reply is useless as business is already stopped resulting into loss of reputation and huge penalty due to delayed performance of contract. Further, harassment is in replying and following up with the department for revocation of suspension.

Such harsh steps of suspension before hearing and without verification is nothing but harassment for no reason.

Therefore, there should be proper guidelines and instructions to officers to verify data first, allow assessee to prove themselves genuine. Only after that, suspension should be initiated, not merely on getting data in order to prevent harassment to genuine taxpayers.

This is where the difference in human intelligence and artificial intelligence lies.