GST Registration of shell Company Cancelled, huge GST Scam involved

The Goods and Services (GST) Department has cancelled the GST registration of Awadh Enterprises as the crime branch of Nagpur police is investigating a huge scam worth hundreds of crores, where fake companies were created, and Awadh Enterprises was one of the companies that were used to issue fake bills.  The issue was identified when the state tax department noticed the matter and informed the central authorities to cancel the registration.

Awadh Enterprises comes under the state GST department’s Kalmeshwar range. The investigation also revealed that these companies used these fake invoices to wrongly claim input tax credit (ITC).

As the registration has been cancelled from the beginning, the ITC earlier claimed by other companies will become void and null. Therefore, these companies that claimed fake ITC through the invoices issued by Awadh Enterprises will now have to pay the taxes.

The GST department does not have the registration information of the other company, Kshitij Enterprises. The crime branch is yet to send these details.

The ITC system in GST allows the taxpayers to reduce their tax liability. ITC is the amount of GST paid by a registered person for the purchase of goods and services from a registered dealer for business purposes. For utilising ITC, the amount can be adjusted with the amount of output tax and the balance of liability of tax that has to be paid to the government. However, sometimes, fake invoices are issued to wrongly claim ITC. The ones making the fake bills usually get a commission.