Commercial Tax Official discovered Multi-State GST ITC Racket of Rs.180 Crore

The Karnataka Commercial Taxes Department arrested the mastermind of a multi-state, multi-crore GST fraud racket, in a two-day operation. The ring issued fraudulent invoices totalling Rs.1008 crore, allowing them to illegally claim Rs.180 crore in input tax credit.

According to an official release, this two-day operation carried out in partnership with Kerala State GST authorities, uncovered considerable fraudulent activity. The accused, Mohammed Siddiq, was arrested in Mysuru on Wednesday.

The accused utilised fraudulent documents to get fake GST registrations, facilitating scrap firms in Kerala, Tamil Nadu, and Karnataka. He also generated bogus tax invoices, misappropriating Input Tax Credit without remitting the taxes to the governments in the first transaction, the tax official said.

He further said, “The fraudulent network expanded its operations to Kerala and Tamil Nadu, collecting false GST registrations and illegally transferring bogus Input Tax Credit to fictitious taxpayers registered in Karnataka. According to officials, the goal was to offset external tax burden, so avoiding GST payment responsibility on outward supplies and resulting in significant losses to the government exchequer.”

“The investigation revealed a systematic strategy organised by the cartel, with accomplices in Mysuru, Mangaluru, and Kerala giving critical assistance. Furthermore, certain auditors and GST practitioners were found to be participating in these fraudulent practices,” the department said.

The department claimed to have successfully broken a GST fraud operation involving about 100 fake registrations in Karnataka, Kerala, and Tamil Nadu.