The trader was detained by the Central Goods and Service Tax (CGST) Commissionerate of Coimbatore officers for issuing invoices without the supply of goods under GST in order to evade taxes for more than 5 crores. However, sources claim that the total tax evasion amounts to Rs. 10.42 crores, and the investigation is still ongoing successfully.
Officials gathered information regarding invoice trading (also known as bill trading) without the supply of goods. During its inquiry, the GST Commissionerate learned that the merchants had participated in bill trading, which comprised receiving and generating bills without actually receiving or providing any goods.
In addition to the invoice problem, it was found that the unit had fraudulently claimed ineligible Input Tax Credits (ITCs) without actually receiving any goods and had transferred these ITCs to their various buyer units intra-state and inter-state without actually supplying any goods, with the majority of them being traders in scrap wood and lumber, leading to significant GST evasion.
To deliver products without an invoice, to issue an invoice without goods, or to claim ITC against invoices created without the provision of goods is a severe offence under the GST statute if the amount of tax evaded hits 2 crores. The total amount of tax evasion, in this case, is 10.42 crores, which is five times the GST Act’s set maximum.
The evasion involved exceeds the prescribed amount, making it a crime that is both cognizable and punished by bail, as stated in Section 132 of the 2017 CGST Act. Further study is being conducted.
Penalties for specific offences are outlined in Section 132 of the CGST Act, 2017. The provision states that the second and each consecutive offences carry a potential five-year jail sentence as well as a fine for those who supply products without an invoice and keep the proceeds of the sale or who issue invoices without the delivery of goods with the intention of evading taxes.
Read also: Full Guide to GST Invoice with Information & Correct Format
The business owner admitted to the crime, and police from the Head Quarters Preventive Unit in Coimbatore were able to capture him. Afterwards, he was remanded in detention for a term of 15 days by the Chief Judicial Magistrate of Coimbatore.
