The Central Goods and Service Tax (CGST) Delhi South Commissionerate recently uncovered a major tax evasion scam involving fake invoicing and circular trading. The officers developed specific intelligence concerning certain bogus firms that were created solely for generating goods-less invoices and passing on of ineligible input tax credit along the chain.
Inspection of Bogus Firms
Following this, inspections were conducted at the registered premises of three bogus firms – NexGen Busicorp, XEL Informatics and GW Infotech Pvt. Ltd. – registered in the jurisdiction of CGST Delhi South Commissionerate. These firms were found to be engaged in fraudulent practices, and incriminating documents were seized from their premises.
Tax Evasion of Rs 17 crore
Preliminary investigations have revealed that these firms were involved in tax evasion worth Rs 17 crore. The proprietor/director of the firms has admitted his role in passing and availing fraudulent ITC without any underlying supply of goods. The persons behind these bogus firms have defrauded the government exchequer and committed offences specified under section 132(1)(b) and 132(1)(c) of the CGST Act 2017. These offences are cognizable and non-bailable.
Arrest of the Accused
As a result of the investigation, two individuals, Shri Sanjay Kumar Srivastava and Shri Sunil Gulati, were arrested on 17.03.2023 for their involvement in the scam. The accused were produced before the Duty Metropolitan Magistrate and have been remanded to judicial custody for 14 days. The investigation is still ongoing.
Overall, this bust highlights the importance of stringent measures against fake invoicing and tax evasion in India. It serves as a warning to those who engage in such fraudulent activities that they will face the full consequences of their actions.