Delhi: Racket busted, 4 held for issuing fake invoices to avail tax refunds

Four people were arrested for issuance of invoices without actual supply of goods and thereafter availing fraudulent Input tax credit for seeking Integrated Goods and Service Tax refunds, Finance Ministry said on Saturday.

Teams from Central Goods and Service Tax (CGST) made the arrests and busted a racket which issued invoices without actual supply of goods in order to seek tax refunds.

"In a joint operation, CGST Delhi (West) and CGST Delhi (North) busted a racket of issuance of invoices without actual supply of goods. Taxpayer availed fraudulent Input Tax Credit for seeking IGST refunds from Customs formations. Four persons arrested and sent to judicial custody for 14 days. Prima facie, fraudulent Input Tax Credit of Rs 195 crores has been passed," read a press release.

Investigations revealed that following a novel modus operandi the taxpayers showed supplies to special economic zones (SEZs) for claiming the fraudulent refund from CGST formations.

"Devender Kumar Yadav and Sanjeev Maheshwari were the masterminds who created dummy firms and also opened bank accounts. Bhawani Shanker Sharma was the accountant who prepared the fake documents and also filed returns on the basis of fake invoices.

"One person, Vinod was shown as proprietor and assisted in the operations of these firms. All four have been arrested and remanded to Judicial Custody for 14 days by the Duty Magistrate at Patiala House Courts, New Delhi. Prima facie, fraudulent ITC of Rs 195 crores has been passed on using invoices involving an amount of Rs 847 crores," according to the release.

The accused had applied for IGST refunds from various ports across India and Rs 18.09 crores had been credited to their bank accounts. Apart from these, three refund claims involving Rs 29.66 crores for supplies made to SEZ were filed in CGST North and West Divisional Offices which had not been sanctioned till date.

"During search operations, unaccounted cash of Rs 91.92 lakhs was also seized and two bank accounts having an amount of Rs 1.68 crores were also provisionally attached," the release read.