Four persons were arrested in a span of two weeks by officials with the Central Goods and Service Tax (GST) Commissionerate for raising fake GST invoices and claiming Input Tax Credit (ITC) from the Central government. In the past year, over 150 cases have been booked by Telangana State Commercial Tax Department over fake GST invoices in Hyderabad.
Amit Mittal the proprietor of Aavya Enterprises, based out of Sanga Reddy district was arrested on Thursday and has been remanded for 14 days. He was arrested for filing fake invoices in tune of Rs 5.7 crore.
This is the fourth such arrest in a span of two weeks since May 17 by the Anti Evasion wing of the Central GST Commissionerate in Telangana.
Officials from the Hyderabad GST Commissionerate had detected eight companies that were issuing fake invoices under the pretext of supplying TMT steel bars and other products. The role of the ninth firm, Aavya Enterprises was revealed recently.
The officials in their release said in the bunch of cases that have come to light fake invoices were raised for goods with an approximate value of Rs 143 crore and a fraudulent Input Tax Credit was claimed in tune of Rs 25.74 crore by the firms. In the case of Aavya alone, it was Rs 5.76 crore.
These companies would procure Aluminum and copper scrap from unregistered suppliers in the open market. They would generate fake invoices from other firms and take ITC based on these invoices. This would then be used by these firms to evade paying GST.
Aavya enterprises and the other eight firms would then resell the goods to manufacturers with proper billing becoming eligible to claim ITC on the raw goods they had sourced from the unregistered supplier.
This ITC is to be paid by the Center, but filing false claims and cheating the government is a cognizable and non-bailable offence under tax evasion clauses under the Central GST Act.
These firms were found passing around fake invoices among each other on the records but in reality, five of these firms were operating from the same address. The officials found many of the directors, proprietors and partners of these firms to be the same.
As part of transferring the goods, the firms would also generate fake e-way bills. The officials had found that the vehicles mentioned in the e-way bill had much lower carrying capacity than the quantity of goods that they claimed to carry.
M Srinivas, the Medchal Commissioner for Central GST Commissionerate told The Hindu that the firms had also defrauded banks by claiming ‘ineligible’ credit facilities or Letter of Credit without submitting any collateral.
Officials with the Telangana State Commercial Tax Department work closely with their central counterparts. “This particular racket has been busted by the Central team, we on the stateside have come across 150 cases of fake invoices within Hyderabad in the last one year,” said M Sathyanarayana Reddy, Enforcement wings special commissioner, Telangana state commercial tax department. “These crimes get caught in the back end, we do a lot of data analysis and keep watch on the patterns that emerge to nab those who claim false ITCs,” he added.
