The Mumbai zonal unit of the Directorate General of Goods and Services Tax (GST) Intelligence has unearthed Rs 408 crore Input Tax Credit (ITC) fraud in which four persons have been placed under arrest on Tuesday.
The scam pertains to allegedly pocketing ITC from the government without the actual supply of goods. ITC is an option in GST that allows the taxpayers to claim credit for the taxes paid on the purchase.
As per the provisions of the CGST law, issuance of an invoice or bill without a corresponding supply of goods and wrongful availment or utilization of ITC can lead to arrest.
The unit arrested the director of M/s. Rane Megastructure Private Limited, proprietor of M/s. ACS Hardware and Networking, director/promoter of M/s Keshariya Metal Private Limited and its group companies and managing director of M/s Shailaja Commercial Trade Frenzy Limited on the charges of having availed and utilised as well as having passed on fictitious ITC total amounting to Rs 408.67 crore on the strength of invoices received and issued without any supply of goods or services.
“On the basis of the investigation conducted, it is seen that M/s ACS Hardware and Networking had fraudulently claimed ITC of approximately Rs 85.38 crore with any supply of goods or services and further the same amount of Rs 85.38 crore was passed on to M/s Rane Megastructures Private Limited on the strength of invoices having taxable value of Rs.474 Crore without any supply,” said a senior officer. “M/s Rane Megastructures Private Limited further passed on ITC of approximately Rs 85.44 crore to another company without any actual supply. In this cartel, bogus ITC has been passed on in a linear manner, in which the ultimate beneficiary has availed and utilised ITC either for payment of their output tax liability or taking refund of unutilised ITC. Some persons of this cartel have been arrested earlier,” he added.
The four persons were arrested under section 69 (1) of the Central Goods and Services Act, 2017, for the committal of offences under section 132 (1) (b) and section 132 (1) (c) of the said act. They were remanded to judicial custody till November 24.
In another case, a group of companies comprising M/s Keshariya Metal Private Limited, M/s Kajal Trading Co., M/s Hi-Tech Impex, M/s Gravity Alloys and M/s Sunshine Impex was found to be involved in creating fictitious invoices with an aim to avail and pass on of ineligible ITC on the strength of only invoices without any supply of goods or services. “In this manner, they have availed and passed on ITC cumulatively amounting to Rs 103.78 crore in a fraudulent manner without any supply of goods or services,” the officer said.
In a separate case, M/s Shailaja Commercial Trade Frenzy Limited was also involved in issue and receipt of bogus invoices resulting into fraudulent availment of ITC amounting to Rs.48.69 Crore on the strength of invoices without any supplies. The bogus supply was used to inflate the turnover, the unit said.
As per section 132 of the CGST Act, 2017, issuance of an invoice or bill without supply of goods or services and wrongful availment or utilisation of Input Tax Credit on a bill/invoice without any supply of goods or services is a cognizable and non-bailable offence.