A Chartered Accountants' Association in Gujarat has written to the state government highlighting allegations that state GST officers are selling confidential return data of traders to their business rivals.
The letter, also marked to the Central Government, warns that unless immediate action is taken, this malpractice could undermine trader confidence and cause irreparable damage to the GST system, which was designed to unify India under one indirect tax framework.
Confidential GST Return Data Being Sold
According to the CA association, critical trade details such as purchase and sale prices, supplier names, buyer details, and quantities, which traders file in their GST returns (like GSTR-1, GSTR-2B, and GSTR-3B), are being sold in black markets. Reports suggest this data is being peddled for anywhere between Rs 8,000 to Rs 15,000 for a 3-month period, enabling rival traders to undercut original sellers and steal their market share.
GSTR-1 includes details of outward supplies (sales), GSTR-2B shows ITC eligibility, while GSTR-3B reflects actual tax liability paid to the government. By accessing this information, competitors can strategically drop prices, imitate supply chains, and destroy the business of unsuspecting traders.
"If this practice continues unchecked, it could collapse the entire GST ecosystem," the association warned in its letter.
Misuse of Powers Under Sections 129 & 130
Apart from the data breach, the letter outlines systemic abuse of authority by GST officers, particularly at transport checkposts. Trucks are being detained, and penalties are being wrongfully imposed under Section 130 of the GST Act instead of Section 129. While Section 129 pertains to detention and release of goods upon payment of a penalty, Section 130 deals with confiscation of goods and is being misapplied to extort higher sums.
In one case, officers reportedly demanded Rs 54,000 for a tax liability of Rs 18,000, and in extreme instances, Rs 1 lakh-equal to the value of the goods themselves, was demanded as penalty.
Despite appeals and legal remedies being available under Section 170, attachments made under Section 83 have not been lifted for over a year, violating the time-bound nature of the law.
Traders Speak Out Against Corruption and Collusion
There are also allegations of corruption in manual GST refunds, where officers are accused of manipulating refund approvals and issuing harsh penalties for minor errors. The CA association has demanded an overhaul of the manual refund mechanism to prevent deliberate delays, bribes and unethical practices.
Traders have accused senior GST officials of colluding internally to leak data and harass businesses with an intent to extract bribes or help rival entities.
Key Issues Raised
- Sale of GST return data (GSTR-1, GSTR-2B, GSTR-3B) by officers for Rs 8,000-Rs 15,000
- Misuse of Section 130 instead of Section 129 to impose disproportionate penalties
- Delayed lifting of property attachments under Section 83 beyond legal time limits
- Corruption in manual refund processing
- Appeal for urgent intervention by the Gujarat and Central Government authorities
This revelation not only raises concerns about data protection and trader rights but also exposes vulnerabilities in India's digital tax governance system, calling for immediate audits, internal vigilance, and policy reforms to restore trust in the GST framework.
CAclubindia
