Bhubaneswar: Officials in Odisha have busted a GST invoice racket allegedly involving ₹712 crore. They have also arrested a businessman for carrying out fake transactions.
Odisha GST commissioner Sushil Lohani said GST officials arrested Madhumita Steels Industries Private Limited director Kashmira Kumar Agrawal for allegedly transferring bogus input tax credit of ₹129 crore to recipients in and the state Odisha through fake invoices worth ₹712 crore.
He said Agrawal had hired middlemen who collected documents, like PAN card, Aadhaar card and photographs, from people in Sundargarh and Sambalpur districts seeking employment, in exchange for money. He, then, allegedly misused the documents to create dummy firms in the name of these people.
Agrawal also allegedly transferred huge sums of money to dummy firms. In case of one firm, he had shown to have purchased goods worth ₹13 crore but had transferred ₹38 crore through its bank accounts. Agrawal was arrested under section 69 of OGST Act, 2017 for cognizable and non-bailable offence u/s 132(1)(a) and (b) read with section 132(4) of OGST Act. On conviction, he can be imprisoned for up to five years.
In other cases, documents showed that Agrawal’s firm despatched tonnes of goods, such as steel and iron items, through scooters, motor cycles, tractors and even cars, raising the suspicion of tax sleuths.
The arrested businessman created fake bank accounts in which he transferred huge sums of money. At least ₹2 crore was seized by the enforcement wing of Odisha GST from some accounts. He used to change his address to Rourkela, Haryana, Tata as well as Sambalpur. Some of the accused involved in the racket were arrested earlier.
{{/usCountry}}The arrested businessman created fake bank accounts in which he transferred huge sums of money. At least ₹2 crore was seized by the enforcement wing of Odisha GST from some accounts. He used to change his address to Rourkela, Haryana, Tata as well as Sambalpur. Some of the accused involved in the racket were arrested earlier.
{{/usCountry}}The detection of GST fraud has come at a time when the state’s collection in the first quarter of 2020-21 fiscal went down by 32.79% compared to the corresponding period of the last fiscal. The total collection in the three months was ₹1,560.2 crore as against ₹2,321.39 crore collected during the corresponding period of 2019-20 fiscal.
GST, the indirect tax regime rolled out in July 2017, has been plagued by rampant tax evasion with fraudsters using technology to create fake e-way bills and GST returns.
Odisha GST officials said at least two cases of major GST frauds have been detected in 2020 apart from the Agrawal case. In January this year, state’s GST enforcement authorities arrested two persons for frauds worth ₹212 crore through 28 dummy firms in the name of daily wage labourers, private tutor, unemployed youths and homemakers.
In March, they busted a fraud in which fake invoices to the tune of ₹294 were generated by 11 dealers in Bhubaneswar. Two persons were arrested in that case.
Last month, the Orissa high court had expressed its concern over increasing trend of GST fraud through non-existent firms and raised questions whether there were certain inherent flaws in the GST system, which is prone to such abuse. Dismissing the bail petition of a person accused of committing GST fraud, HC judge, Justice SK Panigrahi had said fraudsters are taking advantage of the inadequacy of electronic trails of all transactions by employing ingenious methods.