The provisions of ITC or Input Tax Credit under GST is at the centre of a major scam. Some businesses were prospering buy issuing fake GST bills or invoices. In the process, the businesses ended up gobbling a whopping amount of Rs 450 crore as part of the liable ITC. The scam which was unearthed by the vigilant Directorate General of Goods and Services Tax Intelligence (DGGSTI) involved search operations at 21 business and residential establishments in Rajasthan, Madhya Pradesh, Uttar Pradesh and Delhi on 18 May.
As of now the fraudster at the centre of the scam is in hiding. Reports claim that the total value of the fake GST bills could amount to approximately Rs 2,500 crore. The DGGSTI has been very vigilant and all co-conspirators as well as businesses have been sent notices and issued summon.
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In another similar investigation, the DGGSTI exposed a similar ITC scam in Jaipur. The scam was primarily orchestrated by a gang of fraudulent individuals who went as far as issuing GST registration numbers in the names of dead people. Speaking on the fraud, Rajendra Kumar, ADG(DGGI), said, “A total GST evasion of Rs 58 crore under section 132(1) of CGST Act, 2017, has been detected so far. Three people have been arrested and sent to judicial custody until June 2”.
For now, there is no confirmation of a possible common link between the two incidents. However, a similar incident was reported by the GST department last week. Following the expose, two people were taken into custody for issuing fake GST invoices and as well as service charge discrepancies. The scam reportedly could cost Rs 127 crore to the exchequer. One of the two people involved in the scam, subsumed an amount of Rs 79.38 crore through fake GST invoices.
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The person also refrained from depositing the Rs 47 crore service charge liable under GST. The other partner in the crime is reported to run a computer solutions company. The Financial Fraud was carried with the primary motive of evading taxes.