Fake Invoice: CGST Official Busts Rs.185 Crore Fake GST Invoice Racket

Officers of CGST Mumbai South Commissionerate have busted a fake GST invoice racket, which was used to pass on fake GST Input Tax Credit (ITC) of around Rs. 22 crore on bogus invoices of Rs 185 Crores.

Two people who were participating in the tax evasion ring have been detained by the Commissionerate. In exchange for no monetary compensation, one of them—the owner of the Walkasehwar-based company Aditya Enterprises—loaned his identity for the establishment and operation of the company. The second individual is his friend, who ran this business in order to obtain and issue Fake GST invoices.

The anti-evasion division of the CGST Mumbai South Commissionerate opened an investigation on the company in response to a specific tip. Investigation revealed that the claimed business address was actually a residential building with no evidence of any business activity. Investigations further showed that this company had passed on input tax credits totaling Rs. 10.96 crore while falsely claiming input tax credits totaling Rs. 11.01 crore. False invoices of about Rs. 185 crore were generated in flagrant violation of the CGST Act’s 2017 requirements in order to receive and transfer this tax credit without having supplied or received any items.

This tax scam is being carried out through a network of more than 250 corporate organisations, which are dispersed across several states and cities, including Delhi, Mumbai, Kanpur, Thane, and Navi Mumbai. The pursuit of additional information and tax recovery measures is ongoing.

Both of the accused were detained on July 22, 2022, for violating Section 132 of the CGST Act, 2017, based on material evidence acquired during the investigation and their acknowledgment of their involvement in this tax fraud. They were presented in front of Esplanade’s Honorable Additional Chief Metropolitan Magistrate. They have been remanded in detention by the magistrate for a period of 14 days.

The CGST Mumbai South Commissionerate found $949 million in GST evasion for the fiscal year 2021–2022; it collected $18 million and detained 9 tax cheats. In the current fiscal year, the officials of the CGST Mumbai South Commissionerate have made five arrests.

Data analysis and network analysis tools are being used by CGST officials to locate and track suspected fraudsters. This case is a component of the CGST Mumbai Zone’s special campaign against tax evaders and bogus ITC networks. In the upcoming days, the CGST officers will step up their campaign against tax cheats.