DGGST cracks down on 15 dubious companies for circular trading

Bengaluru: The Directorate General of Goods and Services Tax (DGGST) Intelligence cracked down on a racket of circular trading (several parties entering into a conspiracy and buying and selling shares frequently to influence the stock price), it said in a press release on Wednesday. 

While the department conducted searches in over 30 premises in Bengaluru and Mumbai, 15 were found to be dubious companies with no business activity with 9 of them even listed on the stock exchanges of India. 

“Investigation indicates that promoters of such companies resorted to circular trading, duping the common public of their money invested in shares of such companies,” the statement said. 

While the total amount of loss made by the people involved in buying these shares wasn’t disclosed, the fake input tax credit (GST paid by a taxable person on any purchase of goods and/or services that are used or will be used for business) amounted to Rs 3,200 crore from the said companies.

The investigation indicated that GST returns of several of these companies were filed from common internet protocol (IP) addresses, indicating that all these companies were floated by the same scammers.

The investigation also unearthed that these 15 companies had shown receipt of hundreds of crores worth of consumer goods but issued invoices only for services, like information technology support services, management consultancy services, advertising services etc.

The Directorate General of GST Intelligence, Bengaluru Zonal Unit will investigate the matter further. While two key masterminds of the case have been arrested so far, another is absconding.