Fake GST Bill: 8,000 cases involving fake ITC of Rs 35,000 crore booked last year

Amid the ongoing crackdown against tax evaders, more than 500 cases involving 1,200 entities have been booked in the current financial year and it also led to the arrest of 24 persons, whereas, 8,000 cases involving fake ITC of Rs 35,000 crore booked last year, writes ETV Bharat's Deputy News Editor, Krishnanand Tripathi.

New Delhi: In a major crackdown against tax evaders, GST officials booked about 8,000 cases against GST registered entities, chartered accountants, company officials and company secretaries across the country for availing the fake Input Tax Credit worth Rs 35,000 crore in FY 2020-21, said the ministry of finance on Tuesday.

The nationwide crackdown against the fake GST dealers that started in November last year led to better compliance of GST since then as its collection remained above Rs 1 lakh crore in eight consecutive months before declining to Rs 92,849 crore in June this year due to local lockdowns imposed to contain the second Covid wave.

The finance ministry said misuse of the provisions of Input Tax Credit (ITC), which allows the buyer to claim tax credits on the taxes paid by the sellers, is the most common mode of tax evasion under the GST and tax officers regularly detect such frauds. “During the year 426 persons including 14 professionals such as CAs, lawyers and masterminds, beneficiaries, directors were arrested,” said the government.

Officials said the ongoing crackdown, which started in the second week of November last year but slowed down in the last two-three months due to Covid safety concerns, has resumed at the national level. Officials said more than 500 cases involving 1,200 entities have been booked in the current financial year and it led to the arrest of 24 persons. “The number of arrests made by officers of CBIC is one of the highest in recent times,” officials said.

CBIC officers are using the latest IT tools, digital evidence and also collecting information from other government departments to catch the fraudsters. During the drive, cases of fake ITC availment against some well-known companies have also been booked.

Fake rental agreement, fake electricity bills

DGGI Nagpur authorities booked three firms for use of fake rental agreements and fake electricity bills to fraudulently pass on the input tax credit to the tune of Rs 214 crores. These firms submitted fake rental agreements and fake electricity bills and they existed only on paper without any business activities having taken place from their registered place of business.

These firms were showing exports of a common product - smoking mixtures for pipes and cigarettes attracting GST at the rate of 28 per cent and compensation cess at the rate of 290 per cent.

Bogus firms created for GST fraud

Similarly, Chandigarh zone authorities booked a mastermind who passed on fake ITC worth Rs 115 crore by creating and operating bogus firms. He passed inadmissible ITC to several iron and steel units in Himachal Pradesh, Punjab and Haryana. Similarly, a case of fraudulent ITC was also booked by the DGGI SuratZonal Unit in which non – existent firms were found to be engaged in the supply of invoices and passing on illegal ITC to the tune of Rs. 300 crore.