The authorities has launched a significant drive in opposition to Goods and Services Tax (GST) fraud and different defaults value no less than Rs 4,500 crore, and has arrested round two dozen fraudsters in simply 4 days, together with the son of a Maharashtra-based politician, promoters and chartered accountants, two officers with direct information of the matter mentioned on Sunday.
The Directorate General of GST Intelligence (DGGI) crackdown on unscrupulous components engaged in pretend invoices to fraudulently avail themselves of GST enter tax credit score happened after a high-level assembly on the division of income on November 7, the officers mentioned requesting anonymity.
The simultaneous crackdown lined 28 cities: Delhi, Bengaluru, Mumbai, Ludhiana, Chennai, Nagpur, Kolkata, Gurugram, Jind, Ballabhgarh, Ahmedabad, Surat, Vadodara, Bhilai, Jodhpur, Hyderabad, Mathura, Raipur, Visakhapatnam, Jamshedpur, Patna, Imphal, Meerut, Guwahati, Pune, Siliguri, Bhopal and Bhubaneshwar.
In the previous 4 days, 25 folks have been arrested, together with two kingpins and two professionals, and a few 350 circumstances have been booked for issuing pretend invoices in opposition to 1,180 entities for availing and passing on the enter tax credit score (ITC) by pretend invoices, non-existent or fly-by-night companies and round buying and selling, one of many officers cited above, working in DGGI, mentioned. DGGI features underneath the Central Board of Indirect Taxes & Customs (CBIC), an arm of the division of income within the Union finance ministry.
Officials mentioned whereas precise quantity of fraud continues to be being ascertained,the quantity could possibly be in extra of Rs 4,500 crore.
Giving particulars of the most important circumstances, the primary official mentioned that DGGI, Mumbai zone, has already arrested Sunil Gutte, son of a sitting MLA and sugar baron Ratnakar Gutte, alongside along with his enterprise affiliate Vijendra Ranka in a pretend bill rip-off value Rs 520 crore. HT reported this on November 12. “His company, Sunil Hi-tech Engineers Ltd, was engaged in availing and utilizing ITC based on bogus invoices, issued without any supply or receipt of goods or services,” the official mentioned.
The Mumbai zone has additionally booked one other case in opposition to an organization and its administrators for passing on pretend ITC amounting to Rs 209 crore with out supplying iron and metal articles. “It has also been found that they ran the racket of fake invoices for not only evading GST, but in a massive bank loan fraud of more than 2,500 crore,” he mentioned.
“Search and investigation are on to identify and apprehend the other persons who were involved in the racket and also the beneficiaries who have used the fake invoices to evade GST, income-tax, and do money laundering,” the second official mentioned. Fake payments concerned bogus transactions of iron, metal, copper rod and wire, scraps, plastic granules, readymade clothes, gold, silver, development providers, agro merchandise, milk merchandise, cellular, manpower provide providers, ads and animation providers.
“The drive against the tax evaders and ITC fraudsters, which started November 9, is expected to further intensify in the days to come and many more arrests will be done. Cases would also be investigated against the beneficiaries by the Enforcement Directorate for money laundering,” the primary official mentioned.
Fake invoices should not solely used for evading GST and earnings tax, but in addition for inflating bills to siphon off cash from corporations by unscrupulous homeowners, transferring the cash overseas by hawala and bogus or inflated imports and exports, the officers mentioned.
“They are also used to obtain higher loans from banks, siphon the loan money, become NPA [non-performing assets] and then abuse IBC [Insolvency and Bankruptcy Code] process to move to NCLT [National Company Law Tribunal], and thereby defraud banks and other financial creditors,” the second official mentioned.
Considering the menace of the pretend invoices, hawala rackets and their damaging influence on the steadiness of the economic system, additionally it is being examined whether or not, aside from taking motion in opposition to the beneficiaries underneath GST legal guidelines, the Income Tax Act, and the Prevention of Money Laundering Act, issuers of faux invoices in addition to beneficiaries of such invoices might be detained underneath the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, they mentioned.
The authorities can also be tightening the process for brand spanking new GST registration to test frauds, the second official mentioned. “The businesses whose owners or promoters do not have commensurate income-tax payment records will require physical and financial verification before their companies can be given GST registration,” he mentioned.