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Government may approach ICAI to take action against 3 CAs for GST fraud


The GST Directorate General of Intelligence (DGGI) is likely to request the Institute of Chartered Accountants of India (ICAI) to take action against three certified public accountants (CA) arrested for their alleged involvement in generating false invoices to fraudulently exploit the Input tax credit (ITC) under the Goods and Services Tax (GST) regime, two officials said.

All three have been arrested as part of the government’s national campaign against GST fraud, the officials added, requesting anonymity.

The ICAI is a legal body established by virtue of the Public Accountants Law to regulate public accounting in the country. The Institute operates under the administrative control of the Ministry of Corporate Affairs. ICAI is the second largest professional CA body in the world.

The DGGI and the Central GST Commissioner continued their campaign against scammers. It has arrested 41 people, including three CAs and a Chennai-based businesswoman, as part of the campaign. The three CAs are from Hyderabad and Ludhiana.

DGGI (Hyderabad) arrested a CA for his role in organizing and arranging fake invoices from fictitious signatures for a company which led to fraudulent ITC claims worth Rs 27.4 crore. Another Hyderabad CA was arrested for a similar offense that resulted in fraudulent ITC claims worth Rs 10.37 million.

A Ludhiana-based CA was arrested for his role in the creation of three bogus companies, through which he fraudulently used ITC and monetized ITC through refunds and false billing.

Using tools such as artificial intelligence and data analysis on the e-way invoice portal, it was possible to establish that these companies had a common set of phantom partners. They generated bogus invoices worth 158 million rupees, which included a fake ITC of more than 21 million rupees and the monetization of a fake ITC of more than 5 million rupees through cash reimbursement, one of the officials said.

The second person, who works for DGGI, said: “With a total of 41 arrests of GST scammers so far, the agency has filed 577 cases against 2,221 identified entities on the eighth day of its campaign against GST fake invoice scams. “. Recent arrests were made in Gurugram, Nagpur, Kolkata and Mumbai, it added.

The government is also tightening the procedure for the new GST registration to verify fraud. “Companies, whose owners or promoters do not have records of paying proportional income taxes, will require physical and financial verification before their companies can obtain GST registration,” said the first person.

Explaining the threat, he said, false invoices were issued not only for using ITC fraudulently, but also for activities that lead to tax evasion, bank loan fraud, money laundering and hawala transactions. “These activities have largely been carried out by non-existent or fleeting companies and using a network of companies to cheat the system and usurp the ITC on the basis of commissions,” he added.

These activities have been carried out mainly by those elements that have taken advantage of the ease of doing business with the comforts of the existing system by obtaining a GST registration easily and quickly. They took advantage of the liberalized rule for granting GST registration.

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