GST officials arrest chartered accountant for Rs 10.63-cr fraud

A chartered accountant has been arrested by the sleuths of the Central Goods and Services Tax (GST), Mumbai West unit for allegedly availing fake Input Tax Credit (ITC).

The unit arrested Chandraprakash Pandey, partner of CP Pandey and Associates.

“He was arrested on account of indulging in circular trading by way of issuing fake invoices, availing and passing on fraudulent ITC involving GST of about Rs 10.63 crore on turnover of Rs 59.10 crore (approximately),” said a statement issued on Saturday.

On the basis of specific intelligence gathered by the GST officials of investigation wing, Mumbai West Commissionerate, an investigation revealed that numerous companies were created in the name of his family members and were indulging in issuance of invoices without any actual supply of goods or services. The unit stated that he was also enabling other companies to avail ITC on invoices for which no goods or services were supplied, in violation of provisions of the CGST Act, 2017.

The ITC is an option in the GST which allows the taxpayers to claim credit for the taxes paid on the purchase. “This modus operandi enabled buyers/other companies to avail inadmissible ITC thereby causing loss to the government exchequer and also to inflate the turnover in these companies enabling them to obtain bank loans. These transactions are nothing but paper transactions with no actual supply of goods, which in commercial parlance is circular trading,” it added.

The preliminary investigation has unveiled a network of around 50 firms registered in the same premises and involved in fraudulent activity of circular trading.

Pandey was arrested on Thursday and produced before the Magistrate Court in Mumbai which remanded him in judicial custody for fourteen days.

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