Officials of the Gurgaon Goods and Services Tax (GST) Department have uncovered a massive fraud operation involving generation of fake invoices to illicitly claim Input Tax Credit (ITC). The scam operation, working out of an unassuming 10×10 Square Feet shop in the inner alleyways of Khandsa village is said to have routed a massive ₹66,00,00,000 through fake ITC claims.
The operation is said to have been headed by a former property dealer who fraudulently acquired a GST registration for his fake company portraying their involvement in the business of dealing in tax-heavy tobacco and soft drink products.
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A classic case of hiding in plain sight, the modest shop-space had been utilized by the arraigned property dealer to issue phony supply invoices illustrating a business of sale of cigarettes, which attract a mammoth 108% tax burden from GST, excise duty and the National Calamity Contingent Duty.
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Additionally, the fraudsters also portrayed the sale of soft-drinks that attract a tax burden of 40%. The scam operation drew attention from the GST Department when it was noticed that an unusually high amount of business had been generated by the small business within a very short period of time.
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Upon site visit, the GST officials found a tiny business establishment having little to no inventory being used as a shell to convince officials of legitimate business being conducted at the premises. The indicted fraud mastermind faces prosecution under several provisions of the GST Act, 2017 and has been placed in judicial custody till March 5.
Karan Singh, ACP (CGST) involved in the operation stated that the Department employed data analytics using GST Prime and E-Way Bill systems to track the increasing number of sham-companies established to portray business of FMCG products while issuing fake invoices to avail ITC.
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The ACP further stated that India is facing a steep increase in the number of entities involved in retail GST-fraud and how it calls for increased vigilance and advanced detection methods to avert tax-avoidance scams.
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