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February 28, 2021

One Arrest in Delhi for GST ITC fraud of Rs 50 Cr, another in Chennai for undisclosed Income

by facelesscompliance in GST

One Arrest in Delhi for GST ITC fraud of Rs 50 Cr, another in Chennai for undisclosed Income

CGST Commissionerate Delhi officials arrest man for input tax credit fraud of Rs 50.03 crore

The officers of Central Goods and Services Tax (CGST) Commissionerate, Delhi East have unearthed a network of fictitious firms used by their operator to generate and pass on fake Input Tax Credit (ITC) of Goods and Services Tax (GST). The network of fake firms was being operated by one Vishal, who is an advocate by profession and was practicing law in Karkardooma Court, Delhi.

Shri Vishal started this GST fraud by creation of a fictitious firm in his own name which he got registered at his residence.

Subsequently, he arranged various KYCs of different persons to create multiple fictitious firms having no business activity and created solely for the purpose of passing on fake Input Tax Credit and defrauding the Government exchequer. Multiple KYCs and cheques were resumed during the search of his residence. He used to pass on fake Input Tax Credit to his clients in exchange for a commission of 2 % of the invoice amount. The total fake Input Tax Credit passed on quantified so far is Rs. 50.03 crore which is expected to increase as the investigation progresses.

Shri Vishal, Advocate masterminded a deep rooted criminal conspiracy to defraud the Government and knowingly committed offences specified under Section 132(1)(b) and 132(1)(c) of the CGST Act, 2017 which are cognizable and non-bailable offences as per the provisions of Section 132(5) and punishable under clause (i) of sub section 1 of Section 132 of the Act ibid. Shri Vishal has been arrested under Section 69(1) of the CGST Act, 2017 and produced before the Duty Magistrate on 27.02.2021 who remanded him to judicial custody of 14 days till 13.03.2021. Further investigation in the case is in process.

It is pertinent to mention here that since the inception of GST Central Tax, Delhi Zone has made 27 arrests in various cases involving GST evasion amounting of more than Rs. 4019.95 crore.

Income Tax Department conducts searches in Tamil Nadu on 28 Feb 2021

The Income Tax Department conducted searches on a prominent business group   located in Chennai on 26.02.2021. Search was conducted at 11 premises and surveys in 9 premises of the group in Tamil Nadu, Gujarat and Kolkata. This business group is engaged in the business of manufacture and sale of Tiles and Sanitary-ware and are leaders in Tiles business in South India.

In the course of search, unaccounted sale and purchase of tiles were detected.  Due to the efforts of the search team, details of unaccounted transactions were unearthed in the secret office and the software maintained in the cloud.  In fact, it was found that the transactions to the extent of 50% were out of books. Considering the previous turnover, the suppression of income may be in the range of Rs 120 crore.  This is in addition to Rs 100 crore of undisclosed income introduced by the group as share premium through shell companies.

Total undisclosed income detected so far comes to Rs. 220 crore. Cash of around Rs 8.30 crore was also found and seized.

Search action is still on & investigations are in progress.

The Department is fully prepared to check and monitor the role of money in influencing voters. It remains committed to track the generation of unaccounted cash and its movement in Tami Nadu and Puducherry.

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