Chennai CGST Commissionerate arrests Proprietor and Associate in ₹10.64 Cr GST ITC Fraud
The arrested individuals were said to be involved in an operation involving the issuance of bogus invoices of ₹59 crore.
GST - ITC - Fraud - Taxscan
GST - ITC - Fraud - Taxscan
The Chennai North Commissionerate of the Central Goods and Services Tax (CGST) Department has arrested two individuals for orchestrating a large-scale fake GST invoice racket involving the fraudulent availment and passing of Input Tax Credit (ITC) worth ₹10.64 crore.
The arrested individuals were said to be involved with the entity M/s MKN Enterprises - an Iron and Steel Scrap Trading. As per an official release on the Press Information Bureau, the racket involved the generation of bogus invoices valued at about ₹59 crore, without any actual supply or receipt of goods, in gross violation of the provisions of the CGST Act, 2017.
Acting on data analytics and intelligence available on the GST portal, the Anti-Evasion Wing of the CGST Chennai North Commissionerate initiated an investigation into M/s MKN Enterprises. The probe revealed that the firm had fraudulently availed ITC of ₹10.38 crore and passed on ITC of ₹10.64 crore through fictitious transactions. The accused used these bogus invoices to claim and circulate tax credits within a wider network, thereby causing significant loss to the exchequer.
The Commissionerate confirmed that one of the arrested persons is the proprietor of the firm involved in availing and passing on fake ITC, while the other was his associate who played a key role in issuing false invoices to multiple entities. Primary investigation indicated the existence of a web with more than 90 interconnected business entities across Chennai that were involved in this fraudulent activity.
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These entities were allegedly created purposefully to provide a facade of legitimate trade and to circulate fake invoices across various sectors.
The accused were arrested by the Directorate under Section 69 and 132 of the CGST Act, 2017, which empowers the Commissioner to authorize arrests in cases involving tax evasion or fraud and produced before the Additional Chief Metropolitan Magistrate (Economic Offences-II, Egmore) who remanded them to judicial custody.
So far, officials have recovered ₹42 lakh in connection with the case with further investigation to trace the ultimate beneficiaries of the fraud and the money trail underway.
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