A tax auditor’s office and home premises were raided, and the auditor was arrested by tax sleuths from the enforcement wing of the Commercial Taxes department and local police. The auditor was found to be involved in a fake ‘Input Tax Credit’ racket/. 

Input Tax Credit means claiming credit for GST paid on purchase of goods and services used for furtherance of business. The Input Tax Credit mechanism is the backbone of GST, and one of the most important reasons for the introduction of GST. 

Commercial Tax Commissioner C Shikha said, “The auditor used to collect money from GST registered taxpayers under the guise of tax, and misuse the tax amount collected without the knowledge of taxpayers. He was causing a loss to the government exchequer.’’ Shikha said the fraud came to light when officials were investigating payers with very large Input Tax Credit claims. They realised the fraud when field intelligence and data available on the department’s system realised that things were not adding up, and upon verification, they stumbled on evidence that the auditor had duped 12 taxpayers to the tune of about Rs 10 crore. 

The sleuths managed to recover Rs 5.31 crore from the business entities, and began investigation under the relevant rules.  The companies and businesses that were defrauded, have filed multiple FIRs against the errant auditor across police stations, leading to his arrest. “Taxpayers are advised to exercise due care and diligence while paying liabilities through a third person, and effectively utilise services of the GST helpdesk at local GST offices to safeguard themselves,’’ Shikha warned.