Fake GST racket: Officials of the Directorate General of GST Intelligence, or DGGI, have arrested a person for operating a syndicate and issuing false invoices of Rs 4,521 crore for using an input tax credit (ITC) under the Goods and Services Tax . The GST department announced the arrest in a statement a day ago and said DGGI officials had made the arrest from Kolkata in West Bengal after receiving a complaint in Delhi. It said examination of tally data has revealed that there are 636 companies operated by this syndicate and the syndicate’s brain has accepted that they have only issued invoices in these companies and have not delivered any goods against them.
“Examination of Tally data has shown that there are 636 companies controlled by this syndicate. The syndicate brain has accepted that they have only issued invoices in these companies and have not delivered any goods against them. They have issued invoices with a taxable value of approx. €4,521 crore with ITC implication of approx. 741 crore,” the Treasury Ministry said in a statement on Friday, January 14.
In the course of the investigation, GST amounted to Rs. 4.52 crore has been deposited by chargeback from ITC which is available in the ITC ledger of these companies. Further, about €7 crore in various bank accounts of these companies has been frozen so far, the Ministry of Finance said.
The mastermind behind this racket, whose name was not immediately revealed, was arrested on Jan. 13 by GST officers, the government said in its press release. It added that further investigation into the matter is underway.
The ministry said DGGI recently filed a case against some bogus firms, which did not exist in their headquarters. “In order to track down the real persons behind these bogus firms, the physical address was determined from where the GST returns were actually filed,” it said.
“A search was then carried out in that building in Delhi on 06.01.2022. During the search, it was found that the owner is engaged in providing ‘Cloud Storage’ services on its servers to various customers for tracking their financial accounts,” the Treasury Department added in its press release.
The government revealed that when investigating one of the suspicious servers, details of certain companies were found in tally data. “The owner has informed us that these counts are kept by a syndicate in Kolkata. The addresses of these individuals were obtained from the owner and then house searches were conducted in several buildings in Kolkata on January 10, 2022 (January 10, Monday),” the press release said.
During the search, huge amounts of incriminating documents were found, including mobile phones, several checkbooks, stamps from various companies and SIM cards, the statement said. An analysis of electronic devices, documents, mobile phones and email from these individuals revealed that these individuals are remotely maintaining data on the server found at the Delhi property, it added.
Any company subject to the Goods and Service Tax (GST) must issue an invoice that contains a valid GSTIN, proving that the integrated GST collected by the company has been broken. However, to evade taxes, a few dishonest businessmen issue fake GST invoices, which can be identified through various processes. The GST department has regularly monitored and arrested these companies to promote transparency.
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