Officials arrest 25, book 350 cases in nationwide crackdown for Fake ITC
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“The actual amount of fake ITCs involved is being ascertained. Searches and investigations are on to identify and apprehend other people who were involved in the racket and also the beneficiaries who used fake invoices to evade goods and service tax (GST), income tax and for carrying out money laundering,” an official said.
The major goods involved in these cases are scrap, iron and steel articles, copper rods, wires, scrap of non-ferrous metals, plastic granules, PVC resin, readymade garments, gold and silver.
The drive against the GST evaders and ITC fraudsters is expected to intensify and more arrests are likely, a top official said, adding that the Enforcement Directorate would also investigate such cases for money laundering by the beneficiaries.
Before undertaking the drive, the Directorate General of Analytics & Risk Management, DGGI and the Central Board of Direct Taxes collated data against entities suspected of indulging in fake invoices by using data from the Goods and Services Tax Network and artificial intelligence tools.
A strike force was formed to verify and take action in cases related to fake invoices. The cities and towns already covered include New Delhi, Bengaluru, Mumbai, Ludhiana, Chennai, Nagpur, Kolkata, Gurugram, Ahmedabad, Surat, Vadodara, Bhilai, Jodhpur, Hyderabad, Mathura, Raipur, Visakhapatnam, Jamshedpur, Patna, Imphal, Meerut, Guwahati, Pune, Siliguri, Bhopal and Bhubaneshwar.
Fake invoices are not only used to evade payment of GST and income tax, but unscrupulous owners can also use them to inflate expenses to siphon money from companies and transfer the money abroad through illegal channels and by inflating imports and exports.
They are also used to obtain higher loans from banks, which can be siphoned for other purposes and then turn into non-performing assets, thereby defrauding banks and other financial creditors.
Some unscrupulous exporters are said to misuse fake invoices to claim higher GST refunds and merchandising export incentives, which the government has decided to terminate and replace with the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme from January 2021.
Apart from taking action under GST laws, the Income Tax Act and the Prevention of Money Laundering Act, officials said they are examining if the issuers and beneficiaries of fake invoices can be detained under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act.
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