The Central Goods and Services Tax (CGST) officers in Delhi East have exposed a multi-layered network of fictional companies that their operators use to produce and distribute fake input tax credits (ITCs).
Input Tax Credit or ITC is the tax charged on a purchase from a corporation and that can be used to offset the tax burden when making a sale. In other words, companies may limit their tax burden by filing for credit to the extent of the GST charged on sales.
The Input Tax Credit (ITC) framework was introduced into the GST scheme to escape the challenge of 'tax on tax'.
A network of 46 fraudulent companies that have been working since 2017 and have transferred fake ITCs to a variety of recipients has been uncovered and unravelled by GST officers.
The investigation revealed that the fake companies were under the ownership of Shri Arvind Kumar and his associates. The main associate of Shri Arvind Kumar, one Kamal Solanki, had been absconding for the last month.
With continuous attempts, the officers were eventually able to arrest Shri Kamal Singh, who admitted to having been involved in the false billing racket in which fake Rs. 541.13 crore invoices were raised involving fake Rs 82.23 crore ITC, which is likely to rise as the investigation progresses, the Ministry said.
Shri Kamal Singh was arrested and was remanded to judicial custody for 14 days till 23.02.2021. This is the second arrest made in the investigation.
It is important to note here that Delhi Region has made 21 arrests in different cases involving GST evasion amounting to more than Rs. 3791.65 crore since the introduction of GST Central Tax.