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GST authorities bust racket involved in 118 cr tax fraud

The Directorate General of GST Intelligence said that the companies fraudulently availed of input tax credit (ITC) without any supply of goods and services on the strength of bogus invoices and claimed  ₹118 crore as refund against exports.Premium
The Directorate General of GST Intelligence said that the companies fraudulently availed of input tax credit (ITC) without any supply of goods and services on the strength of bogus invoices and claimed 118 crore as refund against exports.

  • The Directorate General of GST Intelligence (DGGI) has busted a racket of seven companies involved in generating fake input tax credit and taking tax refund from the government without any underlying economic activity

NEW DELHI: The Directorate General of GST Intelligence (DGGI) has busted a racket of seven companies involved in generating fake input tax credit and taking tax refund from the government without any underlying economic activity.

An official statement from DGGI said on Saturday that its Mumbai unit arrested a Pune-resident who is the promoter and operator of the seven companies. The companies fraudulently availed of input tax credit (ITC) without any supply of goods and services on the strength of bogus invoices and claimed 118 crore as refund against exports, the statement said.

Creating fake invoices to show tax payments on raw materials and claiming tax refunds on exports is a rampant tax fraud that the authorities have been systematically busting with use of data analytics. GST being a technology intensive tax on value addition at every stage in the supply chain, suspicious transactions raise red flags in the system which the authorities take up for further probe.

DGGI said that in this case, several shell firms were created in Jharkhand and West Bengal on the basis of forged documents. They passed on bogus input tax credit to several shell trading firms acting as intermediary entities in Chhattisgarh. Several units were created as exporting fronts in Pune and Mumbai to which the units in Chhattisgarh supplied fictitious goods purported to be exported. The exporting units were created merely for the purpose of availing of tax refunds in a fraudulent manner, the statement said.

The authorities interviewed several persons in the industry including professionals and freight forwarders before arresting the operator. The accused created a complex web using multiple layers of transactions starting from manufacturers to traders and ultimately to exporters to facilitate encashment of accumulated input tax credit, it said. The government has been on a drive against tax frauds since last November. 

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