Fake GST invoices: 4 held for losses worth Rs 385 crore

Four persons including a chartered accountant have been arrested by the Directorate General of Goods and Services Tax (GST) Intelligence, Bengaluru Zone, in a case of fake GST invoices.

The accused were involved in issuing GST invoices without supplying goods, which leads to wrongful utilisation of Input Tax Credit (ITC).

According to the directorate, the accused had issued invoices worth Rs 2,364 crore which resulted in an ITC worth Rs 385 crore, causing losses to the government.

Documents found during searches conducted by the directorate indicated that some leading infrastructure companies operating in Bengaluru, Huballi and Kalaburagi benefitted from the fraud by using the illegal ITC.

This reduced the tax liability of these companies, which were payable in cash as per GST norms.

Based on intelligence, the directorate officials searched several businesses and residential premises in Bengaluru and New Delhi, following which the arrests were made. The arrested persons had created several bogus entities and registered them under Central GST Act, 2017, using PANs, electricity bills, bank cheques, photographs of their family members, employees and friends. This was used to generate transactions on paper, without actually supplying any goods or services.

Meanwhile, two of the arrested were found to be complicit in a clandestine supply of fast moving consumer goods without issuing any invoices. The duo also simultaneously indulged in issuing invoices to some other customers without supplying any goods and passed on these illegal ITCs, according to the directorate.

During the searches carried out on the accused, a total of Rs 3.02 crore was seized from residential premises, which were linked to such transactions. 22 bank accounts pertaining to various taxable persons involved in the entire nexus was unearthed by the officials.

This is the second such case busted by GST officials in which invoices worth over Rs 1,000 crore were found to be issued by fraudsters. Three people were arrested in November last year for issuing invoices in excess of Rs 1,200 crore, which helped in the generation of illegal ITCs worth Rs 200 crore.