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November 16, 2020

25 Arrested 350 cases booked against 1180 entities for fake Invoice GST Evasion

by facelesscompliance in GST

25 Arrested, 350 cases booked against 1180 entities for fake Invoice GST Evasion

Nationwide drive against GST fake invoices fraud, 25 arrested in last 4 days

In a nationwide drive against fake invoices, non-existent or fly-by-night firms and circular trading, 25 persons have been arrested in just four days, Directorate General of GST Intelligence (DGGI) sources said.

The actual amount of fake ITCs involved is being ascertained. Searches and investigations are on to identify and apprehend other people who were involved in the racket and also the beneficiaries who used fake invoices to evade goods and service tax (GST), income tax and for carrying out money laundering.

The major goods involved in these cases are scrap, iron and steel articles, copper rods, wires, scrap of non-ferrous metals, plastic granules, PVC resin, readymade garments, gold and silver.

The drive against the GST evaders and ITC fraudsters is expected to intensify and more arrests are likely, a top official said, adding that the Enforcement Directorate would also investigate such cases for money laundering by the beneficiaries.

Major goods involved in these cases are MS/SS scrap, articles of iron & steel, copper rod /wire, waste & scrap of non-ferrous metals, plastic granules, PVC resin, readymade garments, gold & silver, construction services, works contract services, agro products, milk product, mobile, manpower supply services, advertisement and animation services, etc.

Before undertaking the drive, the Directorate General of Analytics & Risk Management, DGGI and the Central Board of Direct Taxes collated data against entities suspected of indulging in fake invoices by using data from the Goods and Services Tax Network and artificial intelligence tools.

Following the crackdown on GST fake invoice frauds, DGGI and CGST formations have so far acted in Delhi, Bengaluru, Mumbai, Ludhiana, Chennai, Nagpur, Kolkata, Gurugram, Ahmedabad, Surat, Vadodara, Bhilai, Jodhpur, Hyderabad, Visakhapatnam, etc.

“Considering the menace of the fake invoices and hawala racket and their damaging impact on the stability of the economy, it is also being examined whether, apart from taking action against the beneficiaries under GST laws, Income Tax Act, and Prevention of Money Laundering Act, issuers of fake invoices as well as beneficiaries of such invoices can be detained under COFEPOSA,” said the sources

Fake invoices are not only used to evade payment of GST and income tax, but unscrupulous owners can also use them to inflate expenses to siphon money from companies and transfer the money abroad through illegal channels and by inflating imports and exports.

They are also used to obtain higher loans from banks, which can be siphoned for other purposes and then turn into non-performing assets, thereby defrauding banks and other financial creditors.

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