The Directorate General of Goods and Services Tax Intelligence (DGGI) has detected an alleged fraud of Rs 824 crore in availing input tax credit (ITC), without providing any underlying supply of goods and services by top insurance companies in connivance with intermediaries, such as banks and NBFCs that distribute policies.
The investigation started after specific information against ICICI Prudential Insurance. The investigation revealed that ICICI Prudential had availed and utilised ineligible tax credit without the underlying supply of goods or services. They voluntarily paid Rs 100 crore in cash during the investigation, according to DGGI sources.
Certain common intermediaries were also identified and based on the same aspect of rewards passed on to nominees of agents who are selling policies individually, further intelligence was developed.
The officers of the Mumbai Zonal Unit searched the premises of a number of insurance companies, intermediary marketing companies, NBFCs, and banks in multiple cities.
Similar cases of credit fraud were detected. The investigative agency has also found that these entities had formed an arrangement to pass on ineligible ITC in the guise of marketing services and fraudulent invoices were raised by following a systematic modus operandi in connivance with each other.
According to officials, the modus operandi was systematically planned and executed mainly at the behest of insurance companies.
So far, the GST evasion to the tune of Rs 824 crore has been unearthed and various insurance companies who have availed and utilised ineligible credit have voluntarily paid a total amount of Rs 217 crore in cash under sec 74(5) of CGST Act, 2017 which includes a penalty on the amount.