The Chennai North CGST Commissionerate claimed to have busted a GST invoice racket and unearthed fraud worth at least ₹33 crore.
The Commissionerate, monitoring the trends and patterns in the GST invoices and e-way bills issued during the COVID-19 lockdown, came to know that a criminal gang, including former bank employees, was involved in making fake GST registrations to enable unscrupulous elements to evade tax by generating fake credit transactions and siphone off money.
Simultaneous searches were carried out at several offices and residential premises of the suspects, including a former assistant vice-president of a private bank A. Diwakar and a businessman John Livingston, in the city.
The two had established extensive contacts in banks and among traders. Incriminating documents were recovered during the searches on the premises of their accountants who filed GST returns and prepared e-way bills on their behalf.
During interrogation, it emerged that the suspects and their associates conspired to operate a network of fictitious firms to supply fake GST invoices and pass on input credit to various recipients.
According to Leo John Ilango, Joint Commissioner, CGST and Central Excise, Chennai North Commissionerate, those involved had obtained fake or dormant/non-functioning GSTINS registered in the names of various persons or GST registration was obtained using PAN of unrelated people and the companies were shown as proprietorship firms.
Suspects opened current accounts in banks by creating fake partnership firms with their friends and relatives by using the names of same firms. During verification, it was found that many of the firms did not exist at the given address.
Fake invoices were created and transactions done through the newly created accounts. Fake e-way bills were generated for invoices to create a fictitious trail of goods.
Twenty firms were created by the gang and fake GST invoices for a sum of ₹182 crore were sold to 315 firms. The fraudulent input tax credit generated was estimated at ₹33 crore.
According to Mr. Ilango, the final figure of GST evasion was likely to be higher as investigations were still on.
Those involved have been arrested and remanded in judicial custody.