GST fraud: Taxmen arrest two in Bengaluru for fake ITC claims using 30 shell companies
Karnataka GST authorities on Wednesday arrested two persons on charges of cheating the government worth crores of rupees. A local court remanded Guru Prakash HM and Manjunathaiah HM to judicial custody.
The arrest followed the authorities busting a fake GST bill racket, Commercial Taxes Commissioner C Shikha told ET.
A team led by Additional Commissioner (Enforcement, South Zone) Annies Kanmani Joy is investigating and is likely to make more arrests, the Commissioner added.
The duo ran a syndicate which helped some companies in the manpower and labour supply business to claim input tax credit (ITC) based on fictitious transactions and purchase orders. This is the first of its kind operation where a fake invoice racket in the services sector was busted, the commissioner said.
The accused had joined hands with 30 shell companies involving family members, relatives, friends and others to get ITC of crores of rupees, the investigations revealed.
The department is vetting transactions worth Rs 525 crore and suspects a revenue loss of about Rs 90 crore.
Section 69 of the GST law empowers the Commissioner of CGST or SGST to arrest any person where he has reasons to believe that such person has committed an offence under section 132 (1) (a, b, c, d) and punishable under section 132(1) (i, ii) or 131 (2).
The commercial taxes department, Shikha said, will go after instances of fake invoicing and tax evasion, and the offenders could end up facing a hefty fine, arrest and prosecution along with confiscation of their goods and attachment of their bank accounts.
