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25 detained as Center cracks down on GST fraud


New Delhi

The government has launched a major campaign against goods and services tax (GST) fraud and other breaches worth at least 4.5 billion rupees, and has arrested some two dozen scammers in just four days, including the son of a politician, promoters and promoters from Maharashtra. Chartered accountants, two officials with direct knowledge of the matter said Sunday.

The crackdown by the GST General Directorate of Intelligence (DGGI) against unscrupulous elements involved in false invoices to make fraudulent use of the GST entry tax credit took place after a high-level meeting in the revenue department on November 7 officials said requesting anonymity.

The simultaneous repression covered 28 cities: Delhi, Bengaluru, Mumbai, Ludhiana, Chennai, Nagpur, Kolkata, Gurugram, Jind, Ballabhgarh, Ahmedabad, Surat, Vadodara, Bhilai, Jodhpur, Hyderabad, Mathura, Raipur, Visakhapatnam, Jamshedhalpur, Pattnamna , Meerut, Guwahati, Pune, Siliguri, Bhopal and Bhubaneshwar.

In the last four days, 25 people have been arrested, including two leaders and two professionals, and about 350 cases have been registered for issuing false invoices against 1,180 entities for making use and transferring the supported tax credit (ITC) through invoices bogus, no – Existing or fleeting companies and circular commerce, said one of the officials cited above, who works at DGGI. The DGGI reports to the Central Board of Indirect Taxes and Customs (CBIC), a branch of the revenue department of the Union Ministry of Finance.

Officials said that while the actual amount of fraud is still being determined, the amount could exceed Rs 4,500 crore.

Giving details of the main cases, the first official said that DGGI, Mumbai area, has already arrested Sunil Gutte, son of a sitting MLA and sugar baron Ratnakar Gutte, along with his business partner Vijendra Ranka in an invoice scam. Fake worth Rs 520 crore. HT reported this on November 12. “His company, Sunil Hi-tech Engineers Ltd, was engaged in leveraging and utilizing ITC based on false invoices, issued without any supply or receipt of goods or services,” the official said.

The Mumbai area has also booked another case against a company and its directors for transferring a false ITC worth Rs 209 million without supplying iron and steel items. “They have also been found to have executed the bogus invoice rampage not only for evading the GST, but also a massive bank loan fraud of more than Rs 2.5 billion,” he said.

“The search and investigation is underway to identify and arrest the other people involved in the scam and also the beneficiaries who have used the false invoices to evade the GST, income tax and launder money,” said the second official. The false invoices involved false transactions of iron, steel, wire rod and copper wire, scrap, plastic granules, ready-made garments, gold, silver, construction services, agricultural products, dairy products, mobile services, labor supply, advertisements and entertainment services.

“The campaign against ITC tax evaders and scammers, which began on November 9, is expected to intensify further in the coming days and many more arrests will be made. The cases would also be investigated against the beneficiaries by the Supervision Directorate for money laundering, ”said the first official.

Fake invoices are not only used to evade GST and income tax, but also to inflate expenses to divert money from companies by unscrupulous owners, transferring the money abroad through hawala and imports and exports. bogus or inflated, officials said.

“They are also used to obtain larger loans from banks, divert loan money, become NPAs. [non-performing assets] and then abuse IBC [Insolvency and Bankruptcy Code] process to move to NCLT [National Company Law Tribunal], and thus defraud the banks and other financial creditors, “said the second official.

Considering the threat of false invoices, hawala rackets and their damaging impact on the stability of the economy, it is also examining whether, in addition to taking action against beneficiaries under GST laws, the Income Tax Law and the Prevention of Money Laundering. Under the law, issuers of false invoices and the recipients of such invoices can be detained under the Law on Preservation of Foreign Exchange and Prevention of Smuggling Activities, they said.

The government is also tightening the procedure for the new GST registration to verify fraud, the second official said. “Businesses whose owners or promoters do not have corresponding income tax payment records will require physical and financial verification before their businesses can obtain GST registration,” he said.

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