Goods and Services Tax (GST) successfully completed its second anniversary of implementation in the current month. As mentioned in an article in Financial Express dtd. 22nd July 2019, Finance Ministry of India informed the Parliament that Rs. 45,682.83 Cr. of tax fraud has been found in past two years period. Despite rolling out of GST and associated computer systems, one of the big issue is that of fake invoices and claiming Input Tax Credit (ITC) against such invoices. Some Indian companies in the past practiced fraudulent issuance of Input tax credit invoices without actual supply of goods.
As mentioned in an article in Live Mint dated 02nd July 2019, Finance Minister Nirmala Sitharaman briefed Lok Sabha that in current financial year GST officers have booked 535 cases of fake invoices, with a total claim of Rs. 2,565 Cr. of ITC. She also mentioned that 40 persons have been arrested under fake invoicing offense.
Seriousness of Offense: Non bailable under the CGST Act, 2017 under the provisions of sub section (5) of Section 132 (1).
Players of Cable Industry in Fake ITC Offences
The investigation done by central board of exercise and customs (CBIC) found in all below mentioned cases fake (without material) invoices were being circulated in dummy companies created without movement of goods. Thereafter utilizing input tax credit without actual movement of goods..
Gurugram Zonal Unit of the Directorate General of GST Intelligence (DGGI) arrested renowned businessman Sh. Anil Kumar Jain of M/s Jatalia Global Ventures Ltd, Delhi and Sh. Manoj Garg of M/s Manoj Cables Ltd. Delhi on 18thJuly 2019 under the said offense involving GST evasion of approximate Rs. 40 Cr. on taxable value of concocted supplies of Rs. 210 Cr.
Recently, Patiala House court, New Delhi also cancelled bail for Sh. Rajiv Malhotra, Director of M/s Malhotra Cables Pvt. Ltd., Moti Nagar, Delhi under the same offense for tax evasion in 7 entities out of which 4 were dummy entities.
On 14th Sept 2018, promoters of M/s MICA Industries Ltd., Delhi, M/s Satellite Cables Pvt. Ltd., Bhiwadi and M/s Galaxy Metals Products were also arrested under the same offense for approximate value of Rs. 79.21 Cr. on taxable value of concocted supplies of Rs. 450 Cr.