Officials said the duo fraudulently generated Input Tax Credit from business firms and entities without obtaining any goods in reality, saving up to Rs 15 crore.

Two Mangaluru scrap dealers arrested for creating fake bills to avoid up to Rs 15 cr GST
news Crime Tuesday, June 11, 2019 - 15:18

Two scrap dealers from Mangaluru were arrested by officials of the anti-evasion wing of the Central Goods and Services Tax Commissionerate in the city for evading GST on goods worth up to Rs 84 crore.

PK Abdul Raheem and Abdul Khadar Kuloor Chayebba, who run the firms Thouheed Scrap Dealer and MK Traders respectively, created fake invoices and Input Tax Credit (ITC) to evade tax. Officials investigating the duo stated that they had fraudulently generated ITC from business firms and entities without obtaining any goods in reality. This helped the duo save up to Rs 15 crore.

“The fraudulently obtained ITC was then utilised by the duo for evasion of GST payable by them (to the tax authorities) on their supplies of metal scrap procured from local unregistered dealers without payment of GST, to the manufacturers of aluminium/MS/copper rods/ingots/castings, etc.,” the Commissioner of Central GST for Mangaluru, Dharm Singh, stated.

For instance, if a manufacturer of an iron box produces an invoice showing that GST was paid while obtaining the parts used for manufacture, then while filing company taxes there will be an exemption from paying GST tax again. According to investigating officials in Mangaluru, the duo faked the invoices to show that they have paid GST.

Further, the GST Commissionerate alleged that Raheem and Khadar were also involved in raising fake invoices to transfer ITC further in the fake invoice chain.

Through their modus operandi of fraudulent ITC and fake invoices, the duo had evaded GST to the tune of approximately Rs 15 crore on goods valued at approximately Rs 84 crore.

“The offence involved falls under the cognizable & non-bailable offence as per provisions of Sec. 132 of the CGST Act, attracting inter alia, the provisions for arrest under Sec. 69 of CGST Act,” Dharm Singh said in a press statement.

According to the officials, further investigation is underway to identify other individuals and firms who have benefited from creating fake invoices and a trail of ITC.

Story by Story Infinity (Subs and Scribes Media Ventures LLP.)


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