A woman mastermind arrested in the latest drive against GST fraud

The directorate common of GST intelligence (DGGI) for the primary time arrested a Chennai-based lady mastermind, operating the racket of pretend invoices to fraudulently declare enter tax credit score on the seventh day of its nationwide drive towards the products and companies tax (GST) frauds, officers mentioned.

The Chennai zonal unit of DGGI arrested the ladies as she was operating an internet of seven faux firms created and operated by herself within the names of her members of the family, together with her lately deceased mother-in-law, relations and mates, two officers with direct information of the matter mentioned requesting anonymity.

“A case was booked against her firm for availing and passing on fraudulent input tax credit (ITC) of Rs 14.87 crore on the companies’ fake invoices,” one of many officers mentioned.

Explaining her modus operandi, the official mentioned, “During the search operation at her eight premises in Chennai, it was also unearthed that the identity documents had been procured by her from relatives and friends for a payment of petty monthly sum.”

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Besides her, the DGGI arrested 5 extra individuals together with a chartered accountant within the newest drive, taking the full tally of GST fraudsters’ arrested up to now to 36, which included three chartered accountants. The particular drive, launched on November 9, 2020, led to 519 instances towards 1,736 recognized entities, a second official mentioned.

The GST investigating authority on Thursday arrested two individuals within the National Capital Region (NCR), two in Hyderabad, one in Chennai and one in Ahmedabad. Searches and surveys had been performed in 19 cities — Chennai, Ahmedabad, Nagpur, Visakhapatnam, Siliguri, Patna, Bhopal, Surat, Hyderabad, Nagpur, Raipur, Bhubaneshwar, Jaipur, Ghaziabad, Ludhiana, Delhi, Bengaluru, Mumbai and Kolkata, the official mentioned.

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The authorities can be tightening the process for brand new GST registration to examine frauds, the 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.

Explaining the menace, he mentioned, faux invoices weren’t solely issued for availing ITC fraudulently, but additionally used as conduit for nefarious actions resulting in tax evasion, large financial institution mortgage fraud, cash laundering and hawala transactions. “These activities have been largely carried out by non-existent or fly-by-night firms and by using a network of firms to game the system to usurp ITC on commission basis,” he added.

These actions have been carried out, primarily, by these unscrupulous parts, who’ve exploited the benefit of doing enterprise conveniences within the present system by getting a GST registration simply and shortly and later reap the benefits of the liberalised norm for grant of registration in GST, he mentioned.