Fraud aimed at bogus bank accounts

Hyderabad: The Central GST intelligence arrested two individuals from Hyderabad for creating fake invoices covering goods worth over Rs 600 crore without physical supply.

The fake invoices showed goods worth over Rs 600 crore without physical supply or movement of goods, thereby passing off Rs 80 crore (approximately) of illegal and ineligible income since June 2018.

According to the Central GST official, the modus operandi was to create several bogus companies and bank accounts using PAN and Aadhaar numbers of family members, employees or friends. The frauds then created a complex maze of transactions without supply or movement of goods.

The entire racket revolved around circular supply of goods, primarily to allow other taxpayers to wrongly avail and utilise the input tax credit, which was never paid in respect of any physical receipt of goods.

“This also enabled all stakeholders to increase their annual turnover to enhance their banking loan facilities and to avoid payment of GST in cash. Evidence gathered suggest that some of the leading infra companies operating in Hyderabad have procured such fraudulently issued tax invoices and availed tax credit,” a senior officer told this newspaper.

Based on evidence demonstrating mala fide, the DGGI arrested two persons who orchestrated the entire fraud. The arrested has been remanded in judicial custody and further investigation is pending. 

“Such offences are cognisable and non-bailable. Ten bank accounts pertaining to the fake firms and key persons have been provisionally attached in the interest of government revenue.