DGGI Cracks Down on Fraudulent ITC Racket; One More Arrested in Major Breakthrough

Surat : The Directorate General of GST Intelligence (DGGI), Surat Zonal Unit, has unearthed a large-scale fraudulent Input Tax Credit (ITC) racket operated by non-existent firms in Gujarat and Maharashtra. Acting on valuable information gathered through data analysis and human intelligence, the authorities conducted searches on June 21, 2023, and July 13, 2023, which led to the discovery of 11 fake firms involved in availing ITC based on tax invoices issued by non-existent firms based in Delhi.

The modus operandi of the scam involved these non-existent firms showing supply in GSTR-1M/IFF without any inputs in their GSTR-2A and evading any tax liabilities. Further investigation revealed that these fake firms were passing on fraudulent ITC without any genuine underlying supply of goods.

Upon closer scrutiny, it was discovered that these 11 bogus firms had allegedly supplied fake ITC worth approximately Rs. 115 Crores against goods valued at Rs. 643 Crores to various recipients. Shockingly, these non-existent firms either reported minimal or no inward supply in their GSTR-2A, which led to a vast disparity between the ITC claimed in GSTR-3B and GSTR-2A.

The investigation also resulted in the arrest of two individuals who had availed fake ITC worth Rs. 57 Crores from these sham firms. However, the breakthrough came on July 29, 2023, when the DGGI officials arrested Ravi Kumar, who played a key role in issuing fake invoices and actively passing the fraudulent ITC to multiple recipients.

During interrogation, Shri Ravi Kumar reportedly confessed to his involvement in the fake billing racket. He admitted to issuing forged invoices from non-existent firms to various recipients with the sole intention of facilitating the passage of fake ITC.

The fraudulent ITC scam has raised serious concerns among tax authorities and businesses, as it not only results in substantial revenue losses for the government but also impacts the integrity of the tax system. The DGGI has pledged to continue its efforts to curb such malpractices and ensure strict action against those involved in tax evasion and fraud.

The DGGI, along with other enforcement agencies, is intensifying its crackdown on tax evasion and the misuse of the GST system. With the arrest of Shri Ravi Kumar, the investigative agencies have signaled their determination to uncover and apprehend all individuals and entities involved in such fraudulent activities.

The DGGI has advised businesses to exercise caution while claiming ITC and to conduct proper due diligence on their suppliers to prevent unwittingly becoming part of such fraudulent schemes.