Indore: Network of fake companies circulating fake ITC busted

A taxpayer firm of the city received fake ITC of Rs 27.58 crore and passed it on further CGST Commissionerate succeeds in cracking the network

Staff ReporterUpdated: Saturday, September 24, 2022, 12:17 AM IST
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Indore (Madhya Pradesh): The city-based Commissionerate of the Central Goods and Services Tax (CGST) Department succeeded in busting a network of fake companies circulating fake input tax credit (ITC). A firm based in the city received fake ITC of Rs 27.58 crore. Now, the department is trying to trace the mastermind of the whole fiasco.

Based on data analytics Intel developed by the anti-evasion team of CGST, Indore, it was found that a firm based in CGST, Indore Commissionerate—which falls under the jurisdiction of the chief commissioner, CGST, Bhopal Zone—was involved in a fake input tax credit (ITC) network. The taxpayer firm had received 27.58 crore fake ITC from a firm in Coimbatore, Tamil Nadu, which has no ITC available in their GSTR-2A return.

Partha Roy Chowdury, principal commissioner, CGST Commissionerate, Indore, said here on Friday that the city-based firm had passed on this fake ITC to a firm in Uttarakhand, which had, in turn, passed it on to a firm in Delhi. It was established that there was a network of companies which was utilising this fake ITC further.

Senior IRS officer Roy Chowdhury said that, during the investigation, a novel modus operandi was discovered in which an old firm which wanted to discontinue its business and close GST registration and Registrar of Companies (ROC) registration, was transferred to new persons by the nexus operator via intermediaries, to new directors without changing the name of the company or amending the GSTIN details. The documents of some allegedly unrelated persons were used to carry out this transfer for both the ROC and GST registrations. The ID and password of the GST login was then obtained to pass on fake credit. Thereafter, the company initiated receiving and passing on fake ITC to other companies through the nexus operators.

It is also worthwhile mentioning that the addresses in the Aadhaar card of the directors of the new management were fake. The address in English and Hindi was different in the Aadhaar card. It appears that the identities of some unrelated individuals were misused. The registration of the company is now being cancelled with retrospective effect. Further investigations are on to track the mastermind.

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