Four arrested for GST fraud worth over Rs 2,400 Cr on 10th day of nationwide drive
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Based on the investigation by the Mumbai zone of the Directorate General of GST Intelligence (DGGI), three persons were arrested on charges of having availed and utilised fictitious ITC, they said requesting anonymity.
Separately, DGGI Vadodara zone arrested one mastermind behind a Rs50.24 crore GST fraud perpetrated through 115 fictitious firms, they said.
With this, the total number of arrests during the government’s nationwide crackdown against GST fraud has jumped to 62 in 10 days. This includes one woman mastermind and three chartered accountants (CAs), one of them said.
As per Section 132 of the CGST Act 2017, issuance of invoices or bills without supply of goods or services, and wrongful availment or utilisation of ITC on an invoice, without any supply of goods or services, is an offence, a second official said.
The government has so far booked 793 cases and identified 2,802 entities involved in claiming input tax credit (ITC) on fake invoices without actual supply of goods and services, the official said.
“Meanwhile, DGGI has sent the letter to Institute of Chartered Accountants of India (ICAI) to take obligatory action for professional misconduct against the three CAs who have been arrested in the GST fake invoice frauds from Ludhiana and Hyderabad,” the first official said.
Besides the three arrests by DGGI Mumbai zone and one by the Vadodara zone, seven more arrests were made in Ahemdabad, Kolkata and Chennai zones, he said. The 10-day crackdown took place in 32 cities, including Jaipur, Bengaluru, Delhi, Hyderabad, Ahmedabad, Lucknow, Chennai, Mumbai, Kolkata, Surat, Vadodara, Kochi, Gurugram, Pune, Ludhiana, Ranchi, Patna, Guwahati, Raipur and Jammu.
The government is also tightening the procedure for new GST registration without Aadhaar identification to check fraud, the official said. “The businesses whose owners or promoters do not have commensurate income tax payment records will require physical and financial verification before their companies can be given GST registration,” he said.
Explaining the menace, he said, fake invoices were not only issued for availing ITC fraudulently, but also used as conduit for nefarious activities leading to tax evasion, massive bank loan fraud, money laundering and hawala transactions. “These activities have been largely carried out by non-existent or fly-by-night firms and by using a network of firms to game the system to usurp ITC on commission basis,” he added.
These activities have been carried out, primarily, by those unscrupulous elements who have exploited the ease of doing business conveniences in the existing system by getting a GST registration easily and quickly and later take advantage of the liberalised norm for grant of registration in GST, he said.
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