The Central Goods and Services Tax (CGST) officers had another success in their ongoing effort to root out fake billing operations. The latest investigations led to the discovery of a vast network of fictitious firms generating and claiming fake GST Input Tax Credit (ITC).
According to investigations, a layer of fictitious intermediatory companies was set up to transfer bogus ITC from non-existent and fake firms to Essel Group companies without any real supply of goods or services.
Naresh Dhoundiyal and Devender Kumar Goyal, a chartered accountant, have been identified as the suspects. Both were former Essel Group workers.
This was ostensibly done to enable Essel Group to claim an invalid GST Input Tax Credit, book expenses to avoid paying income tax, and pump up their turnover to drive up the share prices of their publicly traded firms.
The total fake Input Tax Credit passed on by these fictitious is estimated to be Rs. 92.18 crore, while the total fake Input Tax Credit passed on by other fictitious and non-existent firms in the wider network is estimated to be more than Rs. 300 crore. By issuing fake invoices totalling more than Rs. 3,000 crore without actually supplying any goods or services, the syndicate has defrauded the government of more than Rs. 392 crore, a figure that is expected to rise as the investigation continues.
Goyal allegedly arranged the fake invoices of fictitious and non-existent firms, while Dhoundiyal allegedly formed several fictitious intermediary companies for Essel Group.