GST Invoice Fraud - Over 100 People Arrested In Fake GST Invoice Case

GST Invoice Fraud - Over 100 People Arrested In Fake GST Invoice Case

GST Invoice Fraud - What Has Happened? 

GST Invoice Fraud - In The Last One Month, The Directorate General Of Good And Services Tax Intelligence (DGGSTI) Across The Country Has Arrested Over 100 People And Booked 3479 Entities In 1161 Cases For Illegally Availing Or Passing On Input Tax Credit (ITC) By Using Fake GST Invoices And Causing Loss To The Exchequer.

Tax Officials Said The Use Of Fake Invoices To Wrongfully Avail ITC Credit Has Been Gradually Increasing And Has Become A Concern For The The Government, Especially At A Time When Revenue Collection Is Depressed. "GST Invoice Fraud"

How Did Fraudsters Cheat The Government?

GST Invoice Fraud - In A Number Of Cases Booked By The Tex Authority, Fraudsters Have Been Found To Have, Floated Multiple Dummy Firms, Obtained GST Registrations, Issued Fake GST Invoices Of Goods And Services Without Actual Supply Of Services, And Passed On Ineligible ITC Accrued From The Bogus Invoices To Clients For A Commission,

Who Subsequently Used It To Make GST Payments, Causing Losses To The Government.

For Instance, On December 9, The Vadodara Tax Unit Arrested A Individual For Operating 206 Dummy Companies In 10 States,

That Illegally Passed On ITC Of 154 Crore To Clients By Issuing Fake Invoice Of Rs 1101 Crores.

In Some Other Cases, The Tex Department Has Fount That Promoters Of Certain Companies Have Routed Fake Invoices Through A Series Of Shell Companies And Transferred Input Tex Credit From One Company To Another In Circular Transactions To Increase The Turnover Of The Company.

This Helped Them Not Only Evade GST But Also Avail Higher Bank Loans And Credit Facilities Dua To Increased Turnover.

Cases In The Past
According To the Official Date, In 2018-19, The Central GST Authorities Registered 1602 Cases Of Fake ITC Involving An Amount Of Rs 11251 Crore And Arrested 154 People.

Between April And November 2019, The Authorities Booked Over 6000 Such Cases.


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Reason For A Surge In Such Cases?

GST Invoice Fraud - According To Tax Officials One Of The Primary Reasons For An Increase In Companies Availing ITC Fraudulently Is The Lack Of Dua Diligence During The GST Registration.

The Process Of Registration Was Made Easy And Hassle-Free By The Government So That Businesses Could Be Easily On-Boarded To The System.

However, This Meant That A Number Of Dummy Companies Too Obtained The GST Registration In The Absence Of Scrutiny Or Physical Verification Of The Registered Address Of The Companies.

Apart From This, Officials Said, Lack Of Data Exchange Among The Enforcement Agencies And Banks Have Also Led To Increase In Froudcases.

“The Existing GST System Need To Be More Robots To Detect Such Frauds.” Said An Officer.


Will The Tex Department Be Able To Recover The Money From The Fraudsters?

Tex Officials Who Spoke On The Condition Of Anonymity Said In These Cases Recovery Of Money Is Unlikely,

GST Invoice Fraud - As The Money Has Already Been Siphoned And The Companies Involved In The Froud Are Only On Paper With Very Little Or No Assets.


What’s Govt Doing To Curb Such Cases?

The Government Is Planning To Tighten The GST Registration Process And Legal Measures To Deal With The Rising Cases Of Fake Invoicing.

Last Month The Legal Committee Of The GST Council Met To Discuss The Tightening Of The GST Registration Process And Work Out Other Legal Measures Including Necessary Law Amendments Required In The GST Act.

Apart From This, The Directorate General Of Analytics And Risk Management,

The Data Wing Of GST, Has Identified And Issued A List Of 9757 Companies That Have Either Issued Or Availed Fake It Across The Country Between July 20170 And March 2020. GST Invoice Fraud

Q. Who Is The Highest Authority For Appeals Under GST?
A) Supreme Court
B) Ministry Of Finance
C) State High Court
D) Central Board Of Excise And Customs

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