The CGST Commissionerate in Meerut uncovered a big scam involving fake billing. They found 232 fake companies spread across the country, all linked to one mobile number. These companies made false claims for tax credits, totaling over Rs. 1,000 crore.
These fraudulent entities, linked to a single mobile number which was used for the registration of 91 of them, are alleged to have facilitated the unlawful passage of over Rs. 1,048 crore in inadmissible ITC, with declared transactions amounting to approximately Rs. 5,842 crore.
The CGST Commissionerate used tools like the E-way Comprehensive Portal, Advait, and Business Intelligence and Fraud Analytics ( BIFA ) to do a thorough investigation. They broke down the complicated plan made by the syndicate.
As the investigation progressed, Mr. Praveen Kumar emerged as the purported mastermind behind the operation of the 232 bogus firms, shouldering the responsibility of filing GST returns on behalf of these fictitious entities. The authorities seized 10 additional mobile phones and three laptops from Mr. Kumar’s possession, augmenting the evidence collected during the probe.
Further scrutiny uncovered the complicity of ‘Full Fledged Money Changer Companies’ ( FFMCs ) in laundering funds obtained through illicitly obtained ITC. Transactions totaling approximately Rs. 1,120 crore were traced to two FFMCs, with no documentation indicating the disposition of the corresponding foreign currency. The owners and directors of these FFMCs were unable to provide details regarding the ultimate recipients of the foreign currency.
None of the firms responsible for issuing the fraudulent invoices were found to be operational. However, two beneficiary firms that had availed ITC based on these counterfeit invoices were identified.
Upon investigation, it was revealed that these beneficiary firms had transferred funds to accounts belonging to forex companies solely engaged in currency exchange. These accounts were provisionally attached under Section 83 of the CGST Act, 2017, due to their involvement in the fraudulent activities.
Additionally, five bank accounts utilised to conceal the proceeds of their illicit activities have been provisionally attached. So far, three individuals have been apprehended for their roles as perpetrators and conspirators in the creation of fake firms, issuance of counterfeit invoices, and the subsequent laundering of proceeds through fraudulent ITC claims.
The investigation is progressing.
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