A major GST fraud amounting to around Rs 1,200 crore was busted in Bengaluru by the Goods and Services Tax authorities on 14th November 2018. It was stated that in a bid to avoid tax to the tune of Rs 200 crore, GST invoices worth around Rs 1,200 crore were created.
The detection of one of the biggest frauds – the generation of fake bills worth Rs.1200 crore – after the GST regime was implemented last July came after a detailed investigation spread over two months into a web of fake companies.
The module trading in fake GST invoices for claiming input tax credit was busted after the authorities conducted searches at 25 different places on 12th November 2018 based on specific intelligence.
Three persons, Basha, Hafeezur, and Suhail were arrested and later produced before the Economic Offences Court at Koramangala. The trio was remanded in 14 days judicial custody.
The accused – Suhail, Mohammed Basha, and Hafeezur had obtained GST registrations for fake companies that were shown to be engaged in trading of iron and steel scrap to other companies. They exploited the loophole of the system not being able to match GSTR-1 and GSTR-3.
‘The system is currently unable to match the returns. This loophole is being plugged now,” a source said.
While Basha had obtained 14 GST registrations in the names of his relatives and others, Suhail had obtained six. They floated fake companies by giving made-up addresses, which made the investigation difficult.
According to G Narayanaswamy, the Commissioner of Central Tax, Bengaluru, these persons, and the fake companies were engaging in trading of fake tax invoices for availing input tax credit by various steel scrap dealers and manufacturers of iron and steel products.
Their modus operandi was creating fake addresses, issuing fake GST invoices and generating e-way bills. It also included fake/wrong vehicle registration details without actually supplying any goods
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