GST officials bust fake invoicing rackets in Delhi, arrest 5  

GST officials have busted two similar rackets involving use of fake invoices to claim fraudulent refunds of Input Tax Credit (ITC) here and arrested five people in this connection.

The Anti Evasion wing of Central Tax, Delhi West Commissionerate, has busted a major racket of fake invoicing of ₹7,896 crore, involving ITC of ₹1,709 crore, using a network of 23 shell companies, which procured and generated invoices without actual supply of goods and availed as well as passed on ITC.

Two people were arrested in this connection on February 29, the Union Ministry of Finance said in a statement on Tuesday (March 3). They were booked under Section 69(1) of the CGST Act, 2017 and remanded to 14 days of judicial custody by the Chief Metropolitan Magistrate of Patiala House Court.

The racket is yet another case of GST scam where input credit was claimed without actual supply of goods.

The accused persons were evading tax by creating several dummy firms for the purpose of passing on ITC by generation of fake invoices. They also used banking transactions to make ITC appear genuine. These firms issued fake invoices to buyers, who availed fraudulent input tax credit without actually receiving any goods and defrauded the exchequer by way of availing ineligible ITC towards GST liability. They were caught in their hideout with several mobile phones, computers and incriminating documents, the statement read.

The accused have committed offences under Section 132(1)(b) and Section 132(1)(c) of CGST Act, 2017 which are cognizable and non-bailable offences as per the provisions of Section 132 (5) and punishable under Clause (i) of Sub section (1) of Section 132 of the CGST Act, 2017.

Further investigation in the matter is under progress, the statement said.

Copycat case

Officials of Anti-Evasion, Central GST Delhi East Commissionerate, recently unravelled a major operation of circular trading, involving use of fake invoices to claim fraudulent refunds of ITC.

Three people – Asif Khan, Rajeev Chhatwal and Arjun Sharma – were arrested in the case on Sunday (March 1) under Section 69(1) of the CGST Act, 2017 and remanded to judicial custody till March 13 by the Chief Metropolitan Magistrate in Patiala House Court.

The trio, operating a total of 17 fake firms, procured invoices without actual supply of goods and availed as well as passed on ITC fraudulently, to the tune of ₹436 crores. The fraudulently availed ITC was used by them to file refund claims to the tune of ₹11.55 crores under Inverted Duty Structure. The said refund claims were also filed by fake firms floated by the accused persons.

The accused persons are related to each other by marriage and were evading investigation for the last one month. During investigation it came to light that a major Hawala operation was being run by the accused persons in connivance with certain Bank employees (under investigation). The said 17 firms, as stated above, existed only on paper and had been floated for the express purpose of passing on ITC by generation of fake invoices. Companies on both sides of the transactions, recipient as well as supplier, were found to be non-existent.

Certain businessmen are also under investigation for taking entries from the accused persons for the purpose of money laundering. It was further learnt that Khan was running a similar operation even during erstwhile VAT regime. It came to light that the trio were planning to spread their operations to other states at the time they were apprehended.

(With inputs from agencies)