As part of the ongoing drive against Fake invoices, specific Intelligence was developed by the officers of DGGI, Aurangabad Regional Unit that 2 Proprietorship firms involved in trading of MS waste/scrap were involved in availing and passing fraudulent ITC on fake Tax Invoices without supply of any goods.
Searches were conducted by the officers of DGGI, Aurangabad Regional Unit at multiple locations on 3rd/4th December, 2020 during which a number of incriminating documents like diaries and sheets were unearthed from many secret locations. Detailed examination of these documents revealed that the fake transactions had been coded by these firms with GST rates reflecting the commission amount payable for the fake transactions e.g. 5% GST rate meant commission of 2.5% for both sides of the fake transaction. Thousands of transactions made by these Taxpayers were intensively analysed and were compared with the Ledger entries to isolate the fake transactions. During interrogations, the Proprietors of the Taxpayers admitted to the fake transactions so identified and tendered further corroborative details based on Bank Payments of the commission amounts.
The investigations conducted till now have revealed that these Taxpayers had cumulatively availed fraudulent Input Tax Credit of Rs. 18.66 Crore on fake invoices and had cumulatively issued fake invoices of Rs. 14.10 Crore.
The Taxpayers were found to have committed offences specified under clause (b) and clause (c) of sub-section (1) of Section 132 of the CGST Act, 2017. These offences are punishable under clause (i) of sub-section (1) of Section 132 of the CGST Act, 2017 and are Cognizable and non-bailable offences in terms of Section 132(5) of the CGST Act, 2017.
The Proprietors of both Trading Firms were accordingly arrested on 4th December, 2020 based on Arrest Authorizations dated on 4th December, 2020 issued by the Additional Director General, DGGI, Nagpur Zonal Unit under Section 69(1) of the CGST Act, 2017. The Hon’ble Court has remanded both the Proprietors to Judicial Custody till 19th December, 2020.