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Fake GST Racket Worth More than Rs 4,500 Crore Busted in Delhi, 1 Held. Know Details

Fake GST Racket: Officials of the Directorate General of GST Intelligence, or DGGI, have arrested an individual for operating a syndicate and issuing fake invoices of Rs 4,521 crore for availing input tax credit (ITC) benefit under goods and services tax. The GST department notified about the arrest in a statement a day back, saying that the DGGI officials had made the arrest from West Bengal’s Kolkata after receiving a complaint in Delhi. It said scrutiny of tally data has shown that there are 636 firms being operated by this syndicate and the mastermind of the syndicate has accepted that they have issued only invoices in these firms and not supplied any goods against them.

“Scrutiny of Tally data has shown that there are 636 firms being operated by this syndicate. The mastermind of syndicate has accepted that they have issued only invoices in these firms and not supplied any goods against them. They have issued invoices involving taxable value of approx. Rs. 4,521 crore having ITC implication of approx. 741 crore,” said the finance ministry in a statement on Friday, January 14.

During the course of investigation, GST amounting to Rs. 4.52 crore has been got deposited by reversal of ITC available in the ITC ledger of these firms. Further, till now approx. Rs. 7 crore lying in various bank accounts of these firms has been frozen, the finance ministry said.

The mastermind behind this racket, whose name was not immediately revealed, was arrested by the GST officers on January 13, Thursday, said the government in its press release. It added that further investigation regarding the matter was underway.

The ministry said that a case was booked by DGGI against some fake firms recently, which were found non existing at their principal place of business. “To trace the real persons behind these fake firms, the physical address from where GST returns were actually filed was ascertained,” it said.

“Then search was conducted on 06.01.2022 at that premises in Delhi. During search, it was found that proprietor is engaged in providing services of ‘Cloud Storage’ on his servers to various customers for maintaining their financial accounts,” added the finance ministry in its press release.

The government revealed that on  scrutiny of one of the suspicious server, details of certain firms were found in tally data. “It was informed by the proprietor that this tally data is being maintained by one syndicate based in Kolkata. The address details of these persons were obtained from Proprietor and then searches were conducted at various premises in Kolkata on 10.01.2022 (January 10, Monday),” said the press release.

During search huge amount of incriminating documents including mobiles phones, various cheque books, stamps of various firms and SIM cards have been recovered, said the statement. On analysis of electronic devices, documents, mobiles and e-mail of these persons, it has been found that these persons are remotely maintaining data on the server found at the premises in Delhi, it added.

Every business that comes under the ambit of Goods and Service Tax (GST) must issue an invoice that contains a valid GSTIN, which shows the break up of the integrated GST collected by the business firm. However, to evade tax, a few dishonest businessmen issue fake GST invoices, which can be identified through various processes. The GST department has been tracking and nabbing these businesses regularly in a bid to promote transperancy.

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