Tax fraud of Rs 224 crore involving 8 companies unearthed

The companies were found to be indulging in circular fake trading to inflate their turnover and supplying fake invoices and e-way bills to some others.

An alleged tax fraud of Rs 224 crore has been detected along with fake invoices worth Rs 1,289 crore by a group of eight companies involved in the trade of iron and steel products, media reports said. The fraud was detected by officials of the Central GST. 

A press release from the Hyderabad Central GST Commissionerate said Tuesday night that a key suspect involved in the racket has been arrested and Rs 19.75 crore recovered from him.

Simultaneous searches conducted at the residential and business premises of these companies on Tuesday night yielded several documents. 

Media reports said that these companies have been generating fake invoices without actual supply of TMT bars, MS bars, MS flat products among others, and were passing on the input tax credit to other tax payers within the same group, besides some other taxpayers since July, 2017.

The reports said that the fake invoices generated by the fraudsters involved about Rs 1,289 crore of value and input tax credit of about Rs 224 crore. “Five out of these taxpayers are operating from the same address and many of the Directors/Partners/Proprietors of these firms/companies,are common,” media reports quoted from the release. 

Further, as per reports these companies were also indulging in circular fake trading to inflate their turnover, and supplying such fake invoices and e-way bills to some others. “Investigation also, prima facie, reveals that the above modus operandi is also being adopted to defraud the Banks for claiming ineligible credit facilities or Letters of Credit (LCs), without any collateral securities,” the press release said.

Source: FE online/media reports

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