GST-EVASION: DGGI took action against 3 companies for tax evasion of more than Rs 600 Crore
- Three persons arrested on charges of tax evasion of Rs 600 Crore, i.e. for the issuance of fraudulent invoices without the actual supply of Rs 4,198 crores, along with illegally transferred as ITC credit to different entities under the GST Act.
- There was an argument against M/s. Reema Polychem Pvt. Ltd., M/s. Fortune Graphics Limited, & M/s. Ganpati Enterprises, which were found to be engaged in the issuance of invoices without any real supply of goods.
- The case was identified and established by the officers on further data analytics from the case filed against one of the exporters, M/s Anannya Exim, which was protected by the entire India Joint Operation launched by DGGI-DRI in Sept 2019 against various exporters for fraudulently demanding IGST refunds on the basis of ineligible ITC.
Fact of the cases & Action taken
- In the course of the investigations conducted by DGGI Hqrs, it emerged that the 3 companies referred to above, namely M/s. Reema Polychem Pvt. Ltd., M/s. Fortune Graphics Limited and M/s. Ganpati Enterprises respectively.
- Ganpati Enterprises released invoices worth more than Rs. 4,100 Crore which is a tax amount more than INR 600 Cr being transferred fraudulently as ITC credit to different entities.
- Above companies/firms shall be interested in the issuing of bills without any real supply of products.
- This case was found & established by officers on further review of the case filed against one of the exporters, namely M/s Anannya Exim, which was protected by DGGI-DRI’s entire operation in India on 11.09.2019, against different exporters for fraudulently demanded IGST refund on the basis of invalid ITC.
- Three parties have been detained for committing offenses under the GST Act.
- The directors/owners of M/s. Reema Polychem Pvt. Ltd. is two of them who have been on the run and have constantly avoided presence at DGGI Offices.
- Director of M/s AB Players Exports Pvt Ltd and the manager of various other export firms/companies which have received IGST refunds on the basis of counterfeit invoices provided by these companies.
- All three were detained by DGGI (Hqrs.) for committing offenses, pursuant to Sections 132(1)(b) & 132(1)(c) of the CGST Act, 2017 & ordered to be held under judicial custody by the Magistrate.
GST Council has Measures recommended to curb fake dealers/invoice rackets
Finance Ministry issue new Press Release dated on dec 23, 2020, regarding measures recommended by GST Council to curb fake dealers/invoice rackets notified. Following below are the crux of press release
Suspension based on data analytics and mismatches:
- Initiatives suggested by the GST Council to curb counterfeit dealers/invoice rackets made aware
Minimum cash payment to deter dummy businesses
- Mandated by law 1 percent GST payment for all those risky dealers and fly-by-night operators who have uncommon large turnover and lack financial legitimacy
Tightening of the verification process for new registration:
- In-Person Confirmation must be performed for GST Registration, Identification of counterfeit dealers through data analysis, and suspension
- Ease of doing business & precise targeting in the interest of small business intelligently protected.
DGGI of GST Intelligence detects more than 6k fake ITC
- Directorate General of Goods and Service Tax Intelligence detects more than 6k fake Input Tax credit cases involving more than Rs. 57,000 crore Goods and Service Tax evasion with the arrest of 500 persons From April 2020 to Sept 2023.
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