Lucknow: With commercial activity picking up during the festive season, the Uttar Pradesh State Tax Department has intensified its efforts to identify businesses suspected of evading Goods and Services Tax (GST) and causing revenue losses through fraudulent Input Tax Credit (ITC) claims. Teams from the Special Task Force (STF) and the Special Investigation Branch (SIB) have stepped up their operations. This year, investigations are not limited to raids and document checks. Authorities are also using data analytics, risk assessment and digital transaction records to identify suspicious business activities.
According to departmental officials, particular attention is being paid to newly registered firms showing unusual fluctuations in turnover, purchases, sales, tax payments and ITC claims. Reporting sales worth crores of rupees within a short period, claiming ITC several times higher than the value of purchases, issuing invoices without the actual movement of goods and depositing less tax than expected for the scale of business are among the key indicators triggering scrutiny.
FCRF Launches CP-FRM to Build India’s Next Generation of Fraud Risk Professionals
Special vigilance is being maintained in Lucknow, Kanpur, Noida, Ghaziabad, Meerut and Moradabad, among other cities. Officials are monitoring suspicious transactions and business patterns to identify potential tax irregularities and determine whether further investigation is warranted.
Digital Analytics to Identify Suspicious Firms
The department is using the Central Government’s GST Prime analytical tool to detect potentially fraudulent registrations and tax evasion. The system supports risk-based investigations, identification of suspicious ITC claims, cross-verification of data from different systems and detection of circular trading within supply chains.
More than 80 reports are being examined as part of this exercise. These reports can help identify businesses whose declared turnover or tax-related transactions appear inconsistent with available records.
The Business Intelligence and Fraud Analytics (BIFA) system is being used to analyse registration details and business data. Meanwhile, E-Way Bill Analytics helps officials examine the movement of goods and verify associated records. These tools can reveal discrepancies between transportation details recorded in invoices and actual business activities.
Investigations may also be initiated before new businesses file their returns if their activities display suspicious risk indicators. In addition, intelligence inputs and risk signals generated through ADVAIT and GIN are being used to support scrutiny and identify transactions requiring closer examination.
Biometric Verification and Geo-Tagging Strengthen Checks
If data analysis identifies an applicant’s GST registration as high-risk, authorities may verify Aadhaar-based biometric authentication, photographs and original documents. Officials are also examining discrepancies between declared sales, tax liabilities and ITC claims.
Particular attention is being paid to cases in which businesses are suspected of claiming Input Tax Credit against invoices that suppliers have not declared in their own records. Investigators must establish whether the underlying purchases actually took place or whether transactions were merely recorded on paper to obtain tax benefits improperly.
The department is also using geo-tagging of business premises during the registration process. This helps officials compare declared addresses with actual commercial locations. Where addresses, documents or business operations appear suspicious, officers may conduct physical inspections to verify the information provided.
The objective is to determine whether a registered firm is conducting genuine commercial activities or is being used primarily to issue invoices and facilitate fraudulent ITC claims.
Electronics, Jewellery and Textile Businesses Under Watch
As demand rises during the festive season, the department is paying particular attention to invoicing practices and the actual movement of goods in several major trading sectors. These include electronics, mobile phones, gold and silver, textiles, ready-made garments, edible oils, dry fruits and packaged goods.
In these sectors, officials may compare purchase and sales records, e-way bills, tax payments and ITC claims to determine whether the declared transactions are consistent with the scale and nature of business operations.
The department’s strategy is to flag suspicious firms through data-driven analysis and then verify the findings through document checks or physical inspections. However, unusual fluctuations in business activity do not, by themselves, establish tax evasion. Investigators must also examine genuine commercial circumstances, supporting documents and the nature of individual transactions before reaching conclusions.
The intensified monitoring during the festive season is expected to help authorities identify potentially fraudulent invoicing, suspicious supply chains and improper ITC claims. By combining digital tools with field inspections, the department aims to strengthen compliance and protect government revenue during a period of heightened commercial activity.
About the author — Suvedita Nath is a science student with a growing interest in cybercrime and digital safety. She writes on online activity, cyber threats, and technology-driven risks. Her work focuses on clarity, accuracy, and public awareness.
Follow for daily updates on cybercrime, corporate fraud, DFIR, hacking, investigations, and digital forensics
