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Tamil Nadu: Two arrested for GST credit fraud

Our Bureau Chennai | Updated on November 16, 2020

In the process, the accused have committed fraud to the tune of ₹35.72 crore

The GST and Central Excise Department, Chennai Outer, has arrested two persons, both aged about 32, from Pernambut, Vellore District, for committing a GST credit fraud of ₹35.72 crore.

The arrests were made after carrying out detailed investigation and conducting about 50 searches to gather evidence.

They were arrested last Friday and produced before the Additional Chief Metropolitan Magistrate, Egmore, Chennai, and remanded to judicial custody until November 27, says a PIB press release.

The case against the arrested persons was that they along with some others had taken GST registration in the name of other persons after buying identity-related documents from these persons either by making cash payment or supplying groceries to them. The purpose of floating such fictitious companies is to commit GST credit frauds. These fictitious companies issued tax invoices to various business entities without supplying any goods or services to facilitate, for a commission, fraudulent availment of GST credit by these business entities.

GST on such bogus invoices was also paid using input tax credit based on fraudulent tax invoices received from some other fictitious companies opened by the associates of the arrested persons. In the process, GST credit fraud of ₹35.72 crore on the invoice value of ₹401 crore was committed by the arrested persons along with their accomplices.

The department also identified the business entities who had availed fraudulent GST credit passed on by the companies floated by the arrested persons and those companies which passed on deceitful credit to the companies floated by the arrested persons and their accomplices. The investigation is also focused on if any tax practitioner has guided the detained persons in committing these frauds.

Further investigation is ongoing, the release said.

Published on November 16, 2020

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