GST Fraud

First GST Fraud : DGGI Arrests Two In Rs 40 Crore ‘Scam’

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KOLKATA: The Directorate General of GST Intelligence(DGGI) has arrested two persons, marking the first GST fraud-related arrests from the city since the new tax regime rolled out last July. S K Bhuwalka and Neeraj Jain are in judicial custody for GST evasion to the tune of more than Rs 40 crore, but sources suggested that the real magnitude of the GST fraud could be well over Rs 100 crore.

According to sources in the DGGI, the enforcement arm for GST frauds and irregularities, the GST evasion was carried out by creating 10-15 “dummy companies” with the same registered central Kolkata address.

 A GST expert said a dummy firm allegedly floated by the duo used to supply some material to an actual operat-ing company at a price that included the material’s GST. This was only on paper, with no real transaction taking place.
Company used input tax credit to cheat government
 The buying company then used to show the GST paid as “input tax credit”. According to GST rules, this input tax credit, accrued to a firm, can be utilized to pay taxes. Through the fake transactions, the buying company then used to pay GST using their input tax credit, thus defrauding the government exchequer.
“We are conducting further investigations, not ruling out the existence of many more dummy companies that issued fake invoices,” said a source. “Lot of documents have been seized. We shall question the accused further.”
A lawyer at the Sealdah Civil & Criminal Court, where the accused had been produced, said the duo had claimed that they were not directors of any of the companies involved in the racket, and were thus not liable for GST evasion.
Source : TOI

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