2 CAs arrested for fraudulently claiming input tax credit, 7 ETOs suspended

Two chartered accountants were arrested for allegedly floating fake companies and fraudulently claiming input tax credit on transactions worth over Rs 100 crore, following which seven tax officials were suspended, an official said.

The arrested persons were identified as Rakesh Arora and Gourav Behl, working as assistants in the Excise and Taxation Department, he said.

The state government Thursday suspended seven ETOs for allegedly aiding these frauds by issuing C forms to the bogus firms, the official said.

The C forms are issued by a registered dealer to another dealer for an inter-state purchase to obtain a reduction on sales tax.

In the absence of C forms, the companies would not be able to show sales on paper, making them ineligible for input tax credit.

The state government has been investigating fraudulent GST returns for past many months, Excise and Taxation Additional Chief Secretary Sanjeev Kaushal said.

In March, a Special Investigating Team (SIT) was constituted to probe bogus transactions by two Gurgaon-based private companies for their involvement in the exercise of tax evasion during transition from VAT to GST.

The firms included M/s Vipin Enterprises and M/s Uma Traders.

Kaushal said initially, the Gurgaon police was investigating the scam in which more than 15 firms from Gurgaon were involved in bogus refund claims.

Later, 15 firms from Panipat and two from Kaithal and some in Delhi were found involved in the bogus refunds claim, he said, adding that the state government had Thursday handed over the probe to the State Vigilance Bureau.

"We are estimating that funds worth about Rs 100 crore were siphoned off, but we will try to recover the amount," he said.