GST Officials Bust Fake Invoice Racket Worth Rs 50 Crores, Arrest 1

GST officials have busted an illegal input tax credit (ITC) racket which involves 115 fake firms spread over 9 GST Commissionerates.

The officials, according to Fin Min sources, have arrested one, Prince Manish Kumar Khatri, a third-year student and a partner of a CA firm in Ahmedabad for registering fake firms, generating illegal availment and wrongfully passing on of Input Tax Credit (ITC) to the tune of Rs. 50.24 Crores.

The racket was busted using data analytics and the Fin Min sources said that the Directorate General of GST Intelligence (DGGI) is keeping “non-intrusive but a close watch through rigorous data-mining and data analytics on such dubious and unscrupulous elements who in the garb of professionals take up illegal availment of ITC and evasion of GST”. Further investigation is under progress.

The source said Khatri is allegedly the key person involved in registration of 115 non-existent firms and filing of GST returns of such fake firms, thus passing on ineligible ITC for wrong availment and utilization for GST payment.

Out of these 115 fake units, 49 fall under Ahmedabad North Commissionerate; 27 under Vadodara-II Commissionerate; 15 under Bhiwandi Commissionerate; 12 under Gandhinagar Commissionerate.

Another 5 units come under Ahmedabad South Commissionerate; 3 under Jodhpur Commissionerate; 2 under Vadodara-I Commissionerate; 1 under Thane Rural Commissionerate and 1 unit under Bhavnagar Commissionerate.

According to the Fin Min Sources, it was noticed that some 55 suspicious firms were registered under the jurisdiction of Commissionerates of Vadodara and Ahmedabad on a few mobile numbers and e-mail IDs.

On further investigations it was found that the cash credit ratio of tax payment, of these suspicious firms, was very less. Further data analysis showed that for the period for which these firms were active, the ITC availed and ITC utilized for filing GSTR 3B were almost same.

This led to the conclusion that these firms might be issuing fake invoices to the recipients without actual supply of any goods/services who in turn are availing Input Tax Credit (ITC) on the basis of these fake invoices.

“Now the use of Aadhaar in GST registration will bring better control over such unscrupulous professionals who try to create bogus/fake firms for GST evasion by fraudulent availment and passing on of ITC. Such elements are also, very often vocal on social media against various apt measures taken by the government on GST to curb bad/malign practices”, said a top source.

In March too, GST authorities busted a major racket in West Delhi of fake invoicing of Rs.7,896 crore involving fraudulent Input Tax Credit (ITC) of Rs.1,709 crore using a network of 23 shell companies. Two persons were arrested on February 29 in connection with the case.

The source further said law is being further tightened to have better control on such malpractices.


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