Acting upon the intelligence developed by the Anti-Evasion of Central GST G.B. Nagar Commissionerate, an investigation was initiated against the firm Sh. KhatuShyamji Enterprises, Bareilly whereby it was found that the firm was non-existent and involved in passing on ITC fraudulently without having any inward supplies. Accordingly, supply chain analysis was done and searches and physical verifications were conducted at the premises of 10 recipient firms in the chain in Bareilly, Badaun and Chandausi. 5 of these firms were found non-existent at their registered Principal Place of Business. Subsequently, to verify the existence of a related supplier firm in the chain namely M/s Shyam Enterprises, the Anti-Evasion team of CGST- Division Bareilly1 conducted the physical verification of the premises of the said firm and found it non-existent. Later on, the proprietor of the said firm, Sh. Rahul Gupta was traced and he was summoned by the Divisional Anti Evasion team to tender his statement.
Various incriminating documents like bank cheque books, bill books, smart phones, laptop, stamps etc. relating to many firms were resumed from Sh. Rahul Gupta’s car. In his statement, he admitted to the creation of 08 other firms, (which were found non-existent at their address during Physical Verification), to issue invoices without actual supply of goods and thus fraudulently avail ITC and pass on the same to multiple other firms. These firms were created by misusing PAN and Aadhaar cards of innocent persons like auto-drivers, vendors etc. Sh. Rahul Gupta was arrested
on 24.06.2021 and produced before the Special CJM, Meerut who ordered his judicial remand for 14 days.
Sh. Rahul Gupta in his statement also revealed that he was acting on the instructions of Sh. Amit Gupta who was allegedly behind managing the business and financial transactions of the above said firms for the purpose of GST evasion. Sh. Amit Gupta had earlier been named in an investigation pertaining to the fake firm Sh. Vishu Trading, where the proprietor was arrested for GST fraud in April 2021. Consequently, searches were conducted on multiple premises of Sh. Amit Gupta jointly by the Anti-Evasion teams of Headquarter, CGST G.B. Nagar and Anti-Evasion team of CGST-Bareilly-I Division. The officers of Central GST Division, Bareilly-I summoned Sh. Amit Gupta, on 25.06.2021 to tender his statement. During the interrogation, he admitted that he knew Rahul Gupta from last 02 years and admitted in helping create fake firms by obtaining PAN/Aadhar Card as was detailed by Sh. Rahul Gupta. 3 firms were found registered on the mobile number of Sh. Amit Gupta, out of which one firm namely M/s Mahakaal Traders was admitted by him to have been created solely for illegal monetary benefits. Various inward suppliers of the said firm were found to be non-existent, thus strongly implicating Sh. Amit Gupta for his involvement in this fake ITC racket. He also revealed names of other persons involved which is still a matter of investigation.
This operation led to unearthing of GST fraud involving taxable value of Rs. 127.09 crores approx. involving fake ITC of Rs. 14.23 Crores approx. by issuing fake invoices for Mentha oil, Oil seeds, Pulses etc. In this case, several recipient firms who had availed the fraudulently passed ITC have been identified. Recovery of Rs 47 lacs has already been made and more recoveries are expected to be made as investigation progresses. Further enquiry is still underway and quantum of fraud and number of firms involved are likely to go up.
The modus operandi inter alia involved generation of fake invoices without actual supply of goods to pass on huge inadmissible ITC to recipient firms and availment of inadmissible Input Tax Credit passed on by suppliers which were bogus / non- existent.
Subsequently Sh. Amit Gupta, who was allegedly involved in the availment and passing of fraudulent ITC was made liable for punishment under Section 132(1)(b), 132(1)(c) and 132(1)(i) of the CGST Act, 2017. Accordingly, the accused was arrested on 26.06.2021 under Section 69 of the CGST Act, 2017 and sent to jail on judicial remand for 14 days by the order of Spl. CJM, Meerut on 27.06.2021. Further investigation is underway.
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