Tag: itc

The Directorate General of GST Intelligence (DGGI) Gurugram Zonal Unit (GZU), Haryana, has earlier busted a case wherein total fake ITC of  Rs 176 crore has been fraudulently passed on by Sh. Sanjay Goel, Prop of M/s. Redamancy World, and Sh. Deepak Sharma, the de–facto controller of 8 non-existent firms. Accordingly Sh. Sanjay Goel, Prop. of M/s. Redamancy World and Sh. Deepak Sharma has been already arrested by this office, in the matter. On further investigation role of two more key persons, Sh Manish Modi and Sh. Gaurav Agarwal has also been surfaced.

Based on details revealed by further investigation this office has arrested, Sh Manish Modi, Chartered Accountant, resident of Pitam Pura, New Delhi, on charges of creation of running racket of fake firm in order to fraudulently pass on fake Input Tax Credit (ITC), without actual supply of goods or services. It was found that Sh. Manish Modi is managing/controlling  fake firms M/s. Nivaran Enterprises, and M/s Panchwati Enterprises through which he has fraudulently passed on fake ITC to the tune of Rs.  36 crore. Further he has also been found in possession of incriminating evidences indicating many more such firms might be controlled/managed by him for similar purpose, further investigation for same is under way.

Name of Sh. Gaurav Agarwal, Partner of M/s. Agarwal & Company (authorized dealer of ITC) has also emerged as another key person involved in the instant racket of fraud ITC. He has fraudulently passed on fake Input Tax Credit (ITC) amounting to Rs 15 crore (including GST and Cess), thus has been arrested by this office on similar charges. 

Accordingly, Shri Manish Modi and Sh. Gaurav Agarwal were arrested on 23.08.2021 and produced before, Duty MM Delhi, who ordered judicial custody for 14 days. Fake ITC of more than Rs 36 crore and 15 crore, respectively, fraudulently passed on by two persons.

Further investigations in the matter are under progress.

The Goods and Services Tax authorities have unearthed over Rs 31,000 crore of tax fraud committed by misuse of input tax credit (ITC) provision under the Goods and Services Tax (GST) regime during the financial year 2020-21 and booked more than 7,200 cases involving fake ITC. This was stated by Union Minister of State for Finance Shri Pankaj Chaudhary in a written reply to a question in Rajya Sabha today.

Giving details, the Minister stated Input Tax Credit (ITC) fraud detected by CGST formations under Central Board of Indirect Taxes & Customs (CBIC) as following:

S. No.

Period

No. of Cases

Quantum involved

(in Rs. crore)

1

2020-21

7,268

31,233.40

The Minister stated that the Government has taken many steps to prevent such frauds, such as:

• Introduction of AADHAR authentication for processing of new registration application;
• Facility to verify cancelled / existing registrations of the applicants seeking new registrations;
• Provisions to suspend / cancel registration of taxpayers found to the adverse notice of the department;
• Bulk suspension of registration by GSTN based on business intelligence and further follow up of the same by the CBIC;
• Additional grounds for cancellation of registration have been introduced where there is mismatch between FORM GSTR1 and FORM GSTR 3B (Rule 21) of CGST Act, 2017, etc.;
• To prevent fake dealers and shell companies to pass on fake credit, without filing their GSTR3B returns and paying taxes, a provision has been made to block furnishing of outward supply statement in FORM GSTR-1 by a taxpayer, if 2 or more GSTR 3B returns are not filed by the said taxpayer.
• E-invoices have been made mandatory for all B2B transaction with turnover above Rs. 50 crore.
• Generation of E-way bill by those taxpayers who have not furnished return for consecutive period of two month has been restricted.
• Blocking of ITC Credit under Rule 86A of CGST Act, 2017, was introduced if the proper officer has reason to believe that ITC has been availed fraudulently.

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Ministry of Finance Press Release dated 03 August 2021