New Delhi, March 2 The central GST Delhi East Commissionerate has busted a racket involving circular trading and use of fake invoices for claiming refunds of input tax credits (ITCs) worth Rs 436 crore.
As many as 17 fake firms were floated by the fraudsters for circular trading, a modus operandi used by many tax evaders to procure invoices without actual supply of goods and availing the ITC.
The authorities have arrested three persons in connection with the case under Section 69(1) of the CGST Act, 2017. The accused have been remanded to judicial custody till February 13 by the Chief Metropolitan Magistrate, Patiala House Court.
"Asif Khan, Rajeev Chhatwal and Arjun Sharma, operating a total of 17 fake firms, procured invoices without actual supply of goods and availed as well as passed on ITC fraudulently to the tune of Rs 436 crore. The fraudulently availed ITC was used by them to file refund claims to the tune of Rs 11.55 crore under Inverted Duty Structure," a Finance Ministry statement said.
As per the preliminary details, the accused are related to each other by marriage and were evading investigation for the last one month. During investigation, it came to light that a major hawala operation was being run by the accused persons in connivance with certain bank employees (under investigation).
The 17 firms floated to game the system existed only on paper and had been used for the express purpose of passing on ITC by generation of fake invoices. Companies on both sides of the transactions, recipient as well as supplier, were found to be non-existent.
"Certain businessmen are also under investigation for taking entries from the accused persons for the purpose of money laundering. It was further learnt that Asif Khan was running a similar operation even during the erstwhile VAT regime. It came to light that the accused persons were planning to spread their operations to other states at the time they were apprehended," the official statement said.
( With inputs from )