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May 21, 2022

Man Arrested In Gurugram For Issuing Fake GST Invoices Worth 160 Crore

by CA Shivam Jaiswal in GST

Man Arrested In Gurugram For Issuing Fake GST Invoices Worth 160 Crore

Directorate General of GST Intelligence (DGGI)  Gurugram has arrested a person in connection with a case wherein a total Input Tax Credit (ITC) of more than ₹ 160 crore has been utilized and passed on by a network of nonexistent and fake firms in tandem with various existing entities, Ministry of Finance informed on Wednesday.As per a release of the Ministry, based on intelligence which was analyzed and acted upon by the Gurugram Zonal Unit, it emerged that a merchant, who is an importer and wholesale trader of dry fruits has availed IGST Input Tax Credit on imports, but has further issued duty paid invoices to various non-existent firms, whereas the goods (dry fruits) were sold in the open market to various retailers.

“Quiet a few of the firms, to whom invoices were issued were found to be non-existent/fake (registered on GST portal under different HSN), who further issued goodless invoices to fraudulently pass on ITC without supply of any goods. The merchant has rendered itself to liable under Section 122 (i) (ii) of the CGST Act, 2017, etc., as a Consequence of which the merchant has deposited ₹ 5 crore till date, additional recovery in this matter is expected,” it stated.

In all, ten such fake firms busted so far in the investigation, have fraudulently availed and passed on Input Tax Credit (ITC) in excess of ₹ 160 crore, bases on inwards from the merchant, and from other fake/cancelled sources, which is under further investigation.Further, the release stated that the controller of one such firm to whom duty paid invoices were issued without supply of actual goods by the merchant, prima facie passed on fraudulent ITC of ₹ 26.3 crore, was identified as Pawan Kumar Sharma.”It emerged through investigation that Pawan Kumar Sharma is also proprietor of another firm M/s Pawan Traders also involved in passing on fraudulent Input Tax Credit (ITC).

Accordingly, as per the release, Pawan Kumar Sharma was arrested on May 13, 2022 under the provisions of Section 69 of CGST Act, 2017 read with clause (b) (c) of subsection (1) of section 132 of CGST Act, 2017 and produced before CMM, Patiala House Court on May 13, 2022, who ordered judicial custody for 14 days.

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