Bengaluru I-T dept busts Rs 1,200 crore fake GST invoice scam
Three men have been arrested for generating fake bills worth Rs 1,200 crore under the new Goods and Services Tax (GST) regime by the income tax department in Bengaluru after a two-month long investigation, officials said on Thursday.
The three men identified as Suhail, Basha and Hafeezur were arrested on Wednesday and have been remanded in judicial custody for 14 days, I-T officials said. The department said the three men had issued invoices that had a turnover of Rs 1,200 crore, with a liability of Rs 200 crore.
“The Bengaluru South Commissionerate had been working on a group of fake companies registered on the GST network. Our investigations and data analytics revealed that there were a number of companies that were fake and that were issuing fake invoices,” G Narayanaswamy, commissioner of central tax (Bengaluru south), said.
According to Narayanaswamy, the invoices were used repeatedly and eventually reached some iron and steel product manufacturers, who availed themselves of input credit on the basis of these invoices.
“A search was conducted on November 12, where we were able to recover incriminating documents from 25 locations and nabbed three persons believed to be the involved in generating fake invoices,” Narayanaswamy said. “Based on this, they were arrested on Wednesday and sent to 14 days of judicial custody,” he said.
According to the department, the men had obtained GST registrations for non-existent companies that were trading iron and steel scrap and had circulated the fake invoices on the payment of a commission to some iron and steel manufacturers, who availed input tax credit based on this. They are said to have operated using a network of intermediaries.
The department said in a statement Basha and Suhail had together registered 20 fake companies, using the names of their relatives and others.
“Their modus operandi involved creating/floating fake companies at fake/wrong addresses, issuing fake GST invoices and generating e-way bills with fake/wrong vehicle registration details without the supply of any goods,” the department said.
The accused admitted that they had created the fake companies with the intention of committing fraud, officials at the department said.