TN kingpin of fake tax credit arrested, Rs 98 Cr multi State

A fake Input Tax Credit racket to the tune of Rs 98 crore in which firms in States including Maharashtra illegally benefited was busted and the Tamil Nadu based kingpin was arrested following searches.

The racket involved issuing fake invoices worth over Rs 543 crore in the name of eight bogus firms and the kingpin was produced before a court here which remanded him to judicial custody, the Directorate General of GST Intelligence here said.

It involved getting GST registration by creating fake firms and opening bank accounts for such companies. Subsequently, a complex maze of transactions was created between such bogus firms, without actual supply or movement of goods and payment of GST.

 

"The entire racket revolves around circular trading and passing on the Input Tax Credit to various customers without actual supply of goods," Additional Director General, DGGST, K Balaji Majumdar said in a release.

"It was all about round-tripping the money through a labyrinth of monetary transactions involving banking and non-banking channels."

While invoices were issued to allow recipients to avail fraudulent ITC, the actual tax liability on such fictitious transactions was never discharged by the fake companies.

Evidence gathered suggests that companies operating in Pune and Bengaluru have benefited illegally from such tax invoices and availed fraudulent ITC, according to the release.

Preliminary estimates revealed that since July 2017 invoices covering goods worth more than Rs 543 crore were issued by the kingpin and his accomplices using eight fictitious firms floated for this specific purpose.

"These invoices were never accompanied by goods, thereby passing off Rs 98 crore approximately of fraudulent and ineligible ITC to various others..," the release said.

Searches held in several premises in Hosur led to seizure of several documents including copies of fake invoices. Three bank accounts related to the fake firms and other key people have been frozen and further probe is underway.