Fake Input Tax Credit racket of Rs 70 crore busted in Mumbai, 2 held

Acting on a tip-off from Central Intelligence Unit, Mumbai CGST Zone, the officers have arrested two businessmen

Navi Mumbai CGST Commissionerate officers have arrested two businessmen in connection with a fake Input Tax Credit racket, involving CGST of Rs 70 crores, busted by them. Both the businessmen were sent to 14 days judicial custody by a court, CGST Commissionarate, Navi Mumbai said in an official statement.

It further stated that this network, which involves more than 14 business entities and spread across Mumbai, Navi Mumbai, Raigad, Thane, Pune and Nagpur cities had issued bogus invoices of more than Rs 385 crores without any receipt or supply of goods.

Acting on a tip-off from Central Intelligence Unit, Mumbai CGST Zone, the officers have arrested two businessmen. One of the arrested businessmen is a director of M/s Omnipotent Industries Limited which has floated a public issue recently and another one is the proprietor of M/s Shree Bitumax Trading. Both the entities are registered with GST for trading in Bitumen, Asphalt, Oil Shale and Tar Sand, etc., and were indulging in fraudulent availment and passing of Input Tax Credit (ITC) of Rs 20.75 crores and Rs. 11.31 crores respectively without receiving the goods or services, in violation of the provisions of the CGST Act 2017.

Both these firms were availing fake ITC from non-existing entities and passing on the same to other entities of this vicious network. Other 12 entities have availed and passed on fake ITC to the tune of Rs 38 crores.

Both Director and proprietor were arrested under Section 69 of CGST Act 2017 for contravention of Section 132 ibid and produced before the Judicial Magistrate First class, Vashi on Saturday, who has remanded them to 14 days judicial custody. Omnipotent Industries got its public listing in November 2021 and the possibility of misuse of funds, generated from a fake ITC network, for other financial gains is also not ruled out. Further investigation is under progress and other enforcement agencies will also be informed about their nefarious activities.

This operation was a part of a special anti-tax evasion drive initiated by the CGST Mumbai Zone. In this special drive, a trained set of officers is using data analytics and network analysis tools to identify fake ITC networks and potential cases of tax evasion. During this fourmonth-old drive, more than 500 tax evasion cases have been booked leading to the arrest of 40 persons, detection of tax evasion of Rs 4,550 crores, and tax recovery of Rs 600 crores, the statement read.

Recently, on January 3, the officers of Thane CGST Commissionerate had arrested a father-son duo for running a fake ITC network of Rs 22 crores. On January 5, the officers of Mumbai Central Commissionerate had arrested a timber merchant, the proprietor of M/s Noor Timber for availing fake ITC of Rs 5.47 crores from non-existing entities. The officers of the Mumbai zone are also minutely analyzing business transactions related to a digital economy like online gaming, non-fungible tokens, e-commerce to identify the areas of possible tax evasion.

Recently, a case of GST evasion by cryptocurrency exchange WazirX was also detected by CGST Mumbai Zone and GST of Rs 49.2 Crores were recovered during the course of the investigation. The department is going to intensify the anti-tax evasion drive against the fraudsters and tax evaders in the coming weeks.

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