Goods and Services Tax (GST) authorities have unearthed a tax racket that allegedly defrauded the government of about ₹140 Crore through fraudulent means. In a release, the Central Board of Indirect Taxes and Customs (CBIC) said that the Central GST Delhi North Commissionerate has unearthed a racket “involving the supply of goods-less invoices and invoice-less goods.”
As per the statement released by the Ministry of Finance on Tuesday, one person was arrested and sent to judicial custody for 14 days by the Chief Metropolitan Magistrate (CMM), New Delhi at Patiala House Courts in the connection. The accused was found to have created 10 fake firms that were being operated for the rotation of money and fraudulently claiming the input tax credit (ITC), thus defrauding the exchequer.
The release added, “Prima facie fraudulent ITC of about ₹140 Crore has been passed on using invoices involving an amount of ₹1,040 Crore.” Giving additional details, it said that the modus operandi of the accused, among other things, involved obtaining GST registrations of fake firms with the use of documents of unsuspecting individuals and generating goods-less invoices and e-way bills of these firms from a premise in Tilak Bazar, Delhi.
CBIC said the initial scrutiny shows that there is no connection between inward and outward supplies of the errant firms. Furthermore, the firms registered through deceitful means passed on the fraudulent tax credit to a range of buyers who have availed the same to discharge their GST liability on outward supplies, which thus lead to the defrauding of the exchequer.
Hence, the accused was booked under several provisions of the CGST Act, 2017. The statement also stated that investigations are underway to identify the key beneficiaries of this racket and to recover the GST involved.