New Delhi: In the year-long crackdown on tax evasion, the GST authorities have unearthed over Rs 35,000 crore of tax fraud. This tax fraud has been committed by misuse of input tax credit provision under the Goods and Services Tax (GST) regime. During the 2020-21 financial year, the CGST zones and the Directorate General of GST Intelligence (DGGI) booked about 8,000 cases involving fake ITC of over Rs 35,000 crore, a statement from Central Board of Indirect taxes and Customs (CBIC) said Tuesday. Under the GST regime, at the time of paying tax on output, entities can reduce the tax they have already paid on inputs. Some have, however, misused the provision by creating fake invoices on inputs.
“Misuse of the beneficial provision of ITC under the GST regime is the most common modus of evasion under the GST law,” the statement said. “The CBIC has been regularly detecting such cases from the very beginning of the GST regime,” the statement added.
During FY 2020-21, 426 persons, including 14 professionals such as CAs, lawyers and directors, have been arrested.
“Considering the high proportion of fake ITC availment and utilisation, a nationwide special drive against the fake GST invoice was launched with effect from November 9, 2020 which is still continuing,” the CBIC said. “However due to the serious Covid pandemic spread during the past two three months and related safety concerns, the drive slowed down but with gradual lifting of lockdown and improved Covid-19 situation in different parts of India, the department has resumed the drive in coordinated action at national level,” the statement said.
In the nationwide drive, Directorate General of GST Intelligence and CGST Zones under CBIC have during the current financial year detected more than 500 cases involving 1,200 entities and arrested 24 persons. The number of arrests made by officers of CBIC is one of the highest in recent times, the statement said.
CBIC officers are using the latest IT tools, digital evidence and also collecting information from other government departments to catch the fraudsters.
“Along with legislative and procedural changes in the law, the nationwide drive has contributed to better compliance and revenue collection. During the drive, cases of fake ITC availment against some well-known companies were also booked,” the statement said.
Some of the notable cases booked recently include a case by DGGI Nagpur Zonal Unit against three firms involved in passing on fraudulent ITC to the tune of Rs 214 crore and claiming refund of accumulated ITC in fraudulent manner. These firms had submitted fake rental agreements and fake electricity bills and they existed only on paper without any business activities having taken place from their registered place of business.
These firms were showing exports of a common product i.e. smoking mixtures for pipes and cigarettes attracting GST at the rate of 28 per cent and Compensation Cess of 290 per cent.
In another instance, DGGI Chandigarh Zonal Unit booked and apprehended a mastermind, who was operating fake firms for passing on illegal ITC to the tune of Rs 115 crore. On information that fictitious/bogus firms were used to pass inadmissible ITC to various iron and steel units based in Himachal Pradesh, Punjab and Haryana, searches were conducted at multiple premises in Himachal Pradesh (Baddi) and Punjab where incriminating evidences in the form of laptop containing incriminating emails, pen drives, mobile phones evidencing fraudulent transactions were resumed.