Fresh crackdown against GST fraud, five more arrests take total to 30 this month

The authorities’s nationwide drive in opposition to faux Goods and Services Tax (GST) invoices on its fifth day noticed 5 extra arrests, elevating the entire tally of arrested individuals to 30, placing 1,282 company entities below scanner with 393 circumstances booked up to now, two officers with direct data of the matter stated.

The authorities can also be tightening the authorized provisions to penalise such fraudsters, they stated requesting anonymity. The Law Committee of the GST Council is anticipated to satisfy on November 18 to debate this matter.

“The Directorate General of GST Intelligence (DGGI), along with other arms of the government, has intensified its drive to check GST-related frauds,” one of many officers stated.

Earlier, between November 9 and November 13, DGGI launched simultaneous crackdowns in 28 cities, together with Delhi, Bengaluru, Mumbai, Ludhiana, Chennai, Kolkata, Gurugram. The newest spherical concerned locations equivalent to Vadodara, Ahmadabad, Valsad, Silvassa, Visakhapatnam, Hyderabad, Bhubaneswar, Siliguri, Nagpur, Meerut, Kolkata, Guwahati, Jaipur, Bengaluru and Ranchi.

Also Read: Government to filter companies for enter tax credit score fraud

A second official stated one of many main circumstances was reported from Surat in Vadodara Zone, the place a racket of 18 fictitious companies concerned in availing enter tax credit score (ITC) fraudulently with out receipt of products was unearthed.

Another case concerned a agency engaged in offering safety companies and toll assortment companies in Delhi and Gurugram. It availed ITC on the idea of pretend payments with out the precise receipt of products and companies, he stated.

“An investigation showed that in 2018-19, there was a drastic shift in GST payment via ITC only (100%) as compared to previous year, when almost half of such payments were via cash ledger. It was found that ITC of Rs10.39 crore was availed from eight consignors, who were found non-existent at their registered premises,” he stated. The celebration has up to now voluntarily deposited GST of Rs5.07 crore by their money ledger, he added.

The authorities can also be tightening the process for brand spanking new GST registrations to test frauds, the second official stated. “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 stated.

Explaining the menace, he stated faux invoices weren’t solely issued for availing ITC fraudulently, but in addition 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; they use a network of firms to game the system to usurp ITC on commission basis,” he added.

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