GST fraud: Govt goes into overdrive, over 100 arrests in 3 weeks, one denied bail

The Directorate General of GST Intelligence (DGGI) has arrested 104 persons in connection with 1,161 cases of tax credit fraud, in a three-week nationwide drive, official sources said. As many as 3479 ‘fake’ entities with GST registration were unearthed during the drive.

Apart from the number of instances, the enormity of the fraud can also be gauged from the fact that, one person with political connections who was arrested in Maharashtra for a Rs 520-crore scam, was denied bail by the court, despite solid legal support, the sources added.

Given the acute revenue constraints, the GST authorities are leaving no stone unturned to frustrate fraudulent elements in the system. Undue outflow of input tax credit is one of the major reasons for revenue leakage.

On Friday alone, 8 arrests were made in 65 cases concerning 114 fake entities. These fly-by-night firms were involved in circular trading, whereby fake invoices were generated for multiple companies, often owned by the same entity, without any actual supply of goods or services.

During this drive, the DGGI conducted searches and surveys in over 38 cities including metros. “Further investigations are in progress to unravel the network and multiple chains of fake invoices benefactors to ascertain the exact amount of tax evasion,” an official source said.

Further, sources said that some of the arrested kingpins have been denied bail by the courts despite engaging senior lawyers. This includes the case of Sunil Gutte, son of a Maharashtra MLA who is accused of fake invoice scam worth Rs 520 crore.