New Delhi: Central GST Delhi-West Commissionerate has unearthed a racket of issuance of fake invoices without actual supply of goods and services by M/s Royal Sales India and 27 other dummy companies. Two persons have been arrested in this matter and remanded to judicial custody for 14 days by Duty Magistrate, Patiala House Courts, New Delhi. The accused were found to be operating 28 fake companies to facilitate fraudulent Input Tax Credit (ITC), thus defrauding the exchequer. Prima facie, fraudulent ITC of about Rs 108 crore has been passed on using invoices to the tune of Rs 900 crore. Final duty is subject to outcome of the investigation.
On the basis of searches at various suppliers & recipients of goods of the said firms, it was revealed that the modus operandi of these 28 bogus firms involved obtaining GST registration of fake firms all across Delhi using KYC documents of lowly paid individuals and generating goods-less invoices and e-way bills of these firms.
On preliminary scrutiny, it was seen that the inward supplies of the said firm were not in correlation with outward supplies. All these firms have resorted to sale or cause effect of sale of goods, by issuing goods-less invoices and, on collection of the payment by cheque, pay back in cash to the party in question. This is done in order to facilitate these firms under investigation to avail Input Tax Credit for offsetting any likely tax liability and, in some cases, availing IGST refunds.
So far, 15 buyer firms have already admitted their liability vide their Voluntary Statement, and further deposited voluntarily approx. Rs.1.3 crore towards ITC wrongly availed, Interest and Penalty under Section 74(5) of the CGST Act, 2017, till date. Further, approx. Rs 1.58 crore has been frozen in bank holdings of these fake firms.
Both accused have committed offences under the provisions of Section 132(1)(b) and (c) of CGST Act, 2017, which are cognizable and non-bailable under section 132(5) being punishable under Section 132(1)(i) of the said Act, and have been remanded to judicial custody for 14 days on 15 November. Investigations are underway to identify key beneficiaries of this fraud and to further recover GST involved.