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Rs 4,521 crore racket in fake GST invoices by Kolkata based syndicate busted

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The Directorate General of GST Intelligence (DGGI) has busted a whopping Rs 4,521 crore racket carried out by Kolkata-based syndicate which issued invoices in the name of fake firms without actually supplying any goods but claimed Input Tax Credit from the government

The Directorate General of GST Intelligence (DGGI) has busted a whopping Rs 4,521 crore racket carried out by Kolkata-based syndicate which issued invoices in the name of fake firms without actually supplying any goods but claimed Input Tax Credit from the government, according to information provided by the finance ministry on Friday.

“The mastermind of syndicate has accepted that they have issued invoices involving taxable value of approximately Rs. 4,521 crore having an input tax credit (ITC)  implication of approximately 741 crore, the official statement said.

Investigations by the DGGI have revealed that the 636 firms which the  syndicate claimed to be operating in their records did not exist at the principal place of business. 

During the course of investigation, GST amounting to Rs 4.52 crore has been got deposited by reversal of ITC available in the ITC ledger of these firms. Further, till now approx. Rs 7 crore lying in various bank accounts of these firms has been frozen, according to the official statement. 

Input Tax Credit means claiming the credit of the GST paid on purchase of Goods and Services which are used for the furtherance of business. The mechanism of Input Tax Credit is the backbone of GST and is one of the most important reasons for the introduction of GST.

The mastermind behind the whole racket has been arrested.

To trace the real persons behind these fake firms, the physical address from where GST returns were actually filed was ascertained. A search was then conducted on Jan 6 at those premises in Delhi. During the search, it was found that proprietor is engaged in providing services of ‘Cloud Storage’ on his servers to various customers for maintaining their financial accounts.

On scrutiny of one of the suspicious servers, details of certain firms were found in tally data. It was informed by the proprietor that this tally data is being maintained by one syndicate based in Kolkata. The address details of these persons were obtained from proprietor and then searches were conducted at various premises in Kolkata on Jan 10.

During the search a huge amount of incriminating documents including mobile phones, various cheque books, stamps of various firms and SIM cards have been recovered. On analysis of electronic devices, documents, mobiles and e-mail of these persons, it has been found that these persons are remotely maintaining data on the server found at the premises in Delhi.

Further investigation in the case is still in progress.

Also read: Rs 800 crore black cash unearthed in tax raids on real estate firms in AP & Telangana