In a significant move to curb tax evasion under the new Goods and Services Tax regime, the GST Commissionerate, Coimbatore has initiated investigations against some units for doing only bill trading by way of issuing invoices without the supply of goods.
A recent press release issued by the officials, investigations have been initiated against three firms and one Mr. Mohamed Ariff, the main conspirator behind the bill trading, approached the Court wherein the Court ordered him to pay Rs. 5 crore and to co-operate with the investigation.
The fake invoices issued by these companies were used by many scrap dealers and the tax amount in the fake invoices was availed as the input tax credit and used for further bill trading or tax payment for the supply of non-duty paid goods procured without bills from the open market.
During the investigation, it was revealed that Nishok Iron and Steels received and availed of credit of Rs. 5.19 crore from invoices issued by seven firms, including the three firms already investigated. The other four were non-existent units from Chennai. The company, Nishok Iron and Steels, managed by M. Manickam, had received fake invoices without the actual supply of goods on the commission basis. Sri Balaji Metals (M. Chandramohan), registered as scrap dealer but actually involved only in bill trading, has also availed of credit of Rs. 4.95 crore against fake invoices.
According to the press release, the supply of goods without invoice or issue of the invoice without goods and availing of credit against such invoices was a serious offense under GST, for which, the arrest can be made if the amount of tax evaded exceeded Rs. 2 crores.
Both Manickam and Chandramohan were arrested under the GST Act. The credit availed by Nishok Iron and Steels is more than Rs. 5 crore and is a cognizable and non-bailable offense and the credit availed by Sri Balaji Metals is less than Rs. 5 crores and is non-cognizable and bailable offense. A further investigation against various scrap dealers and end users who received invoices without actual supply was under progress, the release said.
