Officials from the Preventive Wing of Central Goods and Services Tax (CGST) Ahmedabad-South Commissionerate have busted a fake GST invoice and fraudulently availing input tax credit (ITC) racket here. CGST Ahmedabad-South Commissionerate officials also arrested a 38-year-old city-based businessman for issuing bogus invoices worth Rs 175 crore for availing ITC worth Rs 32 crore fraudulently.
According to Preventive Wing officials, the arrest was made after incriminating documents and evidence were gathered during searches conducted at various locations based on intelligence and information gathered. It was found that city-based businessman Samirhusain Mithawala had opened over 20 firms using personal details and documents of various individuals to avail benefits under GST fraudulently.
Mithawala has been arrested under Section 69 of the CGST Act 2017 and sent for judicial custody till January 16, 2019, by the Additional Chief Metropolitan Magistrate, Ahmedabad for issuing invoices without any physical movement of goods and claiming ITC without any actual purchases.
Mithawala's modus operandi involved payment of lump-sum amounts to individuals every month in return for using their documents and running firms in their names. After obtaining the documents from such individuals, he took office space on rent for GST registration and also opened bank accounts in the name of such individuals.
"After acquiring the KYC documents, a bank account was opened and rent agreement was completed, and subsequently, GST registration was obtained. Once the GST registration was obtained, he used the GSTIN numbers to generate invoices and pass on GST credit without any actual movement of goods or any financial transactions. All regulatory filings were done by Mithawala who knew all details of the business," the commissionerate stated.
Further, the incriminating documents recovered and evidence gathered during the course of investigation revealed a syndicate was managing and operating several namesake firms for the issuance of invoices without any physical movement of goods. All the firms used to issue invoices without the supply of any goods or services and claimed input tax without any actual purchases.
"It also came to light that the accused had issued invoices for outward supplies to enable various purchasers, who were duly registered in GST to claim input tax credit without receipt of goods and thus facilitated to claim ITC fraudulently. This quantum of evasion and the gravity of the offence is cognizable and non-bailable under the CGST Act, 2017 under the provisions of Section 132," the commissionerate further stated while adding that investigations were still on since involvement of other individuals operating similar fraudulent firms could not be ruled out.
This is the second such arrest made in Gujarat within a fortnight since CGST Vadodara Commissionerate busted a Rs 75 crore fake GST invoice racket and arrested a Kapadwanj-based industrialist for running fake companies with bogus transactions without an actual supply of goods for availing ITC benefits. Earlier in October 2018, the state GST department officials had busted a Rs 10,000 crore fake GST scam.